French Pension Deficit to Worsen Sharply, Warns Advisory Council

France's pension system is on a trajectory toward a significantly worsening deficit, with projections indicating a twelvefold increase by 2070 if no corrective measures are taken. The Conseil d’orientation des retraites (COR), an advisory body, delivered this alarming assessment in its annual report released Monday.

The report highlights that the system, already in deficit, is expected to see its imbalance grow to -0.2% of GDP, or 6.8 billion euros, by 2030. The situation is projected to become dire by 2070, with the gap between revenues and pension payouts potentially reaching -2.4% of GDP. This long-term deterioration is notably more severe than previously forecast.

A primary driver behind this worsening outlook is the declining birth rate in France. The COR's analysis incorporates new demographic projections from INSEE, which anticipate a continued drop in fertility rates, with an average of 1.45 children per woman.

The COR's findings serve as a stark warning to policymakers and social partners about the urgent need for reforms to ensure the sustainability of the French pension system. The report underscores the complex interplay of demographic trends and financial stability in the country's social welfare structure.