Retirement, a problem! What are the solutions?

The january 27, 2023

As you probably know, a reform of our pension system is underway. Which reform is desired by the government, which other type of pension exists, Wealth A7 explains everything to you.

The pay-as-you-go system

As in most European countries, the retirement system in France is based on a pay-as-you-go system. This mechanism, instituted in 1946, operates according to the principle of "solidarity" between generations. That is to say, current working people contribute to finance the retirement pensions of current retirees. However, it is the contributions paid during this period of activity that will be taken into account for the calculation of their future retirement pension.

The bill would, of course, retain the pay-as-you-go mechanism. However, two criteria would be modified since the legal retirement age would be raised from 62 to 64 and the length of contribution would be increased to 43 years, more quickly than that provided for in the so-called "Touraine" law, in order to claim a full pension. Provisions would be put in place to take account of hardship and long careers, and a minimum pension of €1,200 gross per month would be introduced for all full-rate retirees. That is to say, those with a full career and full time contributions at the minimum wage.

Is the funded system the solution?

The funded pension mechanism is completely different, since in this case, working people contribute to their own pension. In general, they contribute to individual or group contracts to build up the capital they will use in retirement. This allows everyone to build up their retirement as they see fit, but it is true that for modest wage earners, there is sometimes the "sacrifice" of this savings phase in order to be able to live the present in better conditions.

This is one of the solutions, but it is not possible at the moment because it would require a complete overhaul of the system and the transition period would pose problems. Indeed, on the one hand we would have working people contributing for themselves and on the other hand retirees having contributed during their working life but without having built up any capital.

As you will have understood, retirement is a complex subject and it is important to be accompanied in order to avoid disappointment as we approach retirement age. This is why we discuss this subject with all our clients to anticipate their needs and problems. As experts in asset management, we help them to build up a supplementary income in anticipation of their retirement with peace of mind.

Would you also like to benefit from our retirement services? Contact us, our team will be happy to answer your questions.

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Article by : STEPHANE SAES

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