Post-Covid retirement, shall we talk about it?

The december 09, 2020

Retirement is an important step for everyone. Indeed after several years of activity it is about a new life which begins, in which some will decide to take time for themselves, for their family, others to travel or to indulge in new activities.

Their standard of living must still allow them to do so - let's not forget that on average, moving to retiree status results in a 30% decrease in monthly income. Otherwise, concessions will be necessary.

Moreover, it is no secret that, especially with the increase in life expectancy, the balance of our pay-as-you-go pension system is being undermined. Add to this the current health crisis and its negative repercussions on the economy and on businesses...

In an already unstable pension system, how will things develop? Can we continue to ensure the functioning of the current system based on solidarity between workers and retirees, even though thousands of people lose their jobs?

Don't let yourself be overwhelmed by a wave of doubt and fear of tomorrow. By asking yourself the right questions and making the right decisions, everything will be fine!

• Reminder of the pay-as-you-go pension system in France:

The pay-as-you-go system in a few words:

The basic and supplementary pensions constitute 2 compulsory retirement schemes.
Above all, the system is based on a principle of solidarity: the retirees of tomorrow finance the retirement of those of today.

Each active person contributes to one or more pension funds, depending on their professional category.

The retirement age and the calculation of the amount of pensions take into account different criteria including the number of quarters acquired, the pension rate, the best years of work ...

The compulsory basic scheme takes into account the remuneration on which you have contributed and your number of quarters of old-age insurance (quarter system).

The supplementary scheme is a points-based pension scheme. Your contributions are converted into retirement points during your career. When you retire, your points are converted back into a pension.

• Reform and health crisis:

- Reform:

While the number of seniors continues to grow, the number of working people is shrinking. So more pensions to pay, but less contributions to finance them ...

This pay-as-you-go operation, deemed complex and unbalanced, was the subject of a reform project in 2019 which will be resumed in 2021. Objective: to homogenize, simplify and balance the organization, through a universal points system. It will bring together the 42 existing schemes, will encourage people to quit working life as late as possible, and will give the same rights to everyone (€ 1 contributed will be the same for everyone…).
This is always based on the principle of distribution.

This reform caused a lot of agitation and debate because it would lead to a fall in the level of pensions, an increase in contributions and in the retirement age to benefit from the full rate.

And what about in a context in which, for many, there is also the loss of employment or, at the very least, reduced working time (and de facto contributions)?

- The health crisis does not help anything:

Distribution, okay, but to distribute what if there are not enough contributors?

Indeed, the observation of the impact of this crisis on retirement is as follows: with economic layoffs and bankruptcies, the increase in partial activity, the decrease or postponement of contributions, we wonder where the budget will come from to continue funding pensions.

In its annual report, the Retirement Orientation Council figures the deficit, from the date of the first confinement to today, at 23.5 billion euros.

The reform also provides that the indexation of pensions will be calculated on the evolution of wages and no longer on inflation, yet in a context where wages will continue to decline ...

At 3 workers for 1 retiree, the system was already thought to be no longer viable. And now, how can we hope to last?

Remember: the current retirement system was already insufficient to maintain a lifestyle similar to that before retirement. The current situation does not give hope for an improvement. Anticipation therefore becomes very important in order to move forward with peace of mind.

And there are many solutions to actively prepare for your retirement: by investing now in both financial and real estate investment vehicles, when the time comes, you will be able to benefit from additional income or enhanced capital:

- Some financial solutions: French PER, life insurance contract, French PEA ...: they will allow you to benefit from capital valued over time while offering you other advantages during your working life ...

- Some Real Estate solutions: Non-Professional Furnished Rental, European REIT… for additional non-taxed income!

In conclusion, the difficulties that France encounters in managing its pension system are significant, and it is very difficult to say how it will be distributed and at what height in the years to come. In a weakened economic context, it seems utopian to think that a pay-as-you-go system will be able to continue.

Decide not to suffer from an uncertain system. Anticipate by organizing your assets, this is the key to ensuring your future as calmly as possible!

Now is the time to take charge of your retirement, and our team is here to help!


Article by : Paola COLLALTO

Request for consultation

32, rue d’Alsace Lorraine 31000 Toulouse


Phone : +(33) 6 27 36 33 53 -