22:25 GMT +317 January 2020
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    A planned overhaul of France's pension system – one of Emmanuel Macron's key campaign promises – has caused the biggest strikes in the country in more than two decades.

    Defying pressure from trade unions, the French government is moving ahead with its widely-criticised pension reform.

    Unveiling the details of the reform on Wednesday, Prime Minister Edouard Philippe said that it would merge the many special pension regimes into a universal system.

    "The implementation of the new universal system will mean the end of specific regimes," Philippe said in a televised address, adding that unions and employers would have a say on how this system is governed.

    France has a complicated pensions system, which is divided into 42 "special regimes" across private and public sectors. Pensions for private-sector employees are calculated based on their 25 best years of salary; in the public sectors, pensions are based on the last six months of salary. Macron is determined to merge them all into a single points-based system regardless of the industry. 

    What are the details of Macron's plan?

    Under the new retirement plan, those who have worked a full career will be entitled to a monthly pension of €1,000 minimum per month.

    This proposed system won't change the legal retirement age which now stands at 62, but workers will have to work until 64 to get a full pension. Edouard Philippe noted that the government will use a system of discounts and bonuses to encourage people to delay their retirement.

    France's moderate CFDT union said that the latter proposal this part of the plan has crossed a "red line" and pledged to consider further protest actions.

    Edouard Philippe said that the pensions bill will be submitted to parliament in late February. The government will start to introduce the changes as soon as it is adopted – in 2020 or in early 2021 – but will do it gradually, so as not to affect older workers. The prime minister vowed that nothing will change for those who are less than 17 years away from retirement, and that the universal system will apply in full to new workers starting a job beginning in 2022 – the final year of Emmanuel Macron's current presidential term.

    Philippe also promised that soldiers, firefighters, prison guards and the police will retain the right to retire early under the planned reform.

    Generous, but costly

    The official retirement age in France has been raised from 60 to 62 in the past decade, but employees who quit without working enough time (172 quarters, or 43 years) receive a reduced pension. Some categories of workers in the public sector, for instance those in rail transport and energy industry, retire in their early to mid-50s and enjoy shorter weeks.

    Overall, the French pensions system is considered to be one of the most generous in the world, with French retirees receiving 73.6 percent (OECD estimate, net) of what they earned prior to retirement, compared with an OECD average of 58.6 percent.

    This generosity resulted in massive pressure on France's government budget: the country is currently spending 14 percent of GDP on pensions – only Greece and Italy spend more in Europe in terms of GDP percentage.

    In a 2015 overview of France's pension policy, the OECD said that "the French pensions system offers good protection but through a complex structure", and that it produces "great inequalities" and "problems of coordination" as well.

    President Macron has claimed that it is too complicated and confusing to an average worker, and that it discourages labour mobility (because workers sometimes do not understand what benefits they would enjoy if they change jobs).

    A nationwide strike against the reform

    French workers, especially those in the public sector, have become increasingly worried that messing with this system would see them face reduced pay-outs or make them work longer to avoid benefit cuts.

    These concerns led to several rounds of nationwide protests, sometimes violent, that swept across the country since last Thursday. According to French unions, around 885,000 demonstrators protested on Tuesday, as opposed to the 1.5 million they said turned out on 5 December. The unions have called for more days of industrial action on Thursday, 12 December, and Tuesday, 17 December.

    Tags:
    Emmanuel Macron, retirement, pensions, France
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