Pensions: here’s what would happen if the government applied the calculation rules from private to public

If the government seems to rule out the hypothesis of imposing private calculation rules on civil servants in the pension reform it is preparing for 2023, the statistics department of the social ministries (DREES) has nevertheless tried to identify the impacts potential of such a measure.

Most of the study, which therefore awards civil servants a pension calculated on the basis of the salary of their best 25 years of career rather than the last six months (excluding bonuses and allowances), is devoted to the generation of civil servants born in 1958.

If the rule for calculating 25 years was applied to them as in the private sector, the pension of these civil servants would be on average 1.5% higher than that which they would have received under the current rules.

In other words, “there would be no manifest inequity at the global level, despite the differences in calculation methods between the regimes”summarizes the Drees.

10% up or down

However, “the impacts would vary greatly depending on the individual and in particular according to their initial level of pension”nuance the authors of the study.

A large third (35%) of civil servants of the 1958 generation would benefit from an increase in their pension of more than 10% compared to the current calculation rules. Conversely, 13% would see it fall by more than 10%.

“Individuals with the highest pensions are mostly losers, while individuals with pensions in the intermediate brackets are more often winners”according to DREES.

“Tightening pension gaps”

Furthermore, the standardization of the calculation rules would benefit more civil servants whose remuneration is largely made up of bonuses.

In general, “the transition of civil servants to the rules of the private sector would rather tend to narrow pension gaps” between public officials.

To study the impact of standardized calculation rules on the generations born after 1958, the DREES bases itself on the projections of changes in wages and productivity from the Pensions Orientation Council.

She concludes that the generations of the late 1960s and early 1970s would be “relatively more favored”unlike later generations.

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