Économie et Statistique n° 441-442 : Pension systems and their reforms; assessments and projections
The 1993 Pension Reform: Impact of Increase in Contribution Length
The 1993 reform of France's statutory pension system (régime général) increased the contribution length required to obtain a full pension from 37.5 to 40 years. The lengthening was gradual, in increments of one quarter per birth cohort from the 1934 cohort to the 1943 cohort. The goal was to motivate employees to defer retirement by tightening the contribution-length requirement. The impact of the longer contribution record on the age of full-pension eligibility and on the contribution quarters effectively paid after age 60 is studied here using cohort-specific variations and as a function of the contribution length at age 60, a variable created by the reform's gradual implementation. We looked at persons in employment at age 60 who, because of the longer contribution requirement, have basically been forced to choose between continuing to work and retiring with reduced benefits. The results suggest that a significant number have postponed their exit from the workforce. The deferrals are longer for men, with postponements of nine months per additional year of required contributions; for women, the delays are shorter, averaging five months. This measure of the elasticity of labour supply relative to the contribution record needed for a full pension should not be generalized unduly: only a small minority of employees have been genuinely affected by the increase in the contribution period mandated by the reform. Moreover, they are not necessarily representative of all French retirees, and-even less arguably-of future retirees.