The French government is looking to temporarily halt pension increases for individuals whose pensions exceed 1260 euros. According to a recently reviewed legislative draft, this action will be carried out through an executive order.
Details of the new plan
The proposed mechanism by the French government, presented to the Council of State, allows for more flexibility in implementing changes compared to initial announcements. In this plan, the government can legally set a threshold above which pensions will no longer increase. This action is similar to a measure taken in 2019 by the government of Édouard Philippe for pensions over 2000 euros.
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Instead of setting specific rates for pension increases, the French government has proposed a three-tier system. In this system, pensions up to 1260 euros will increase at the rate of inflation, while for pensions between 1260 and 2034 euros and above 2034 euros, there is a possibility of halting increases or even reducing pensions.
Political responses and implications
Silence regarding this action is clearly felt among politicians and experts. A former social accounts expert at the Ministry of Economy described this plan as a clever attempt to solve the problem for parliament representatives. Representatives are looking to stop pension increases but do not want to directly vote against it.
Sébastien Lecornu, Minister of Public Management, has promised that no pension will be reduced and that the pace of pension increases will be determined in parliament. Currently, only the government is given the authority to determine the amount of pension increases, without a specific rate being announced.
In fact, the government can use this authority to readjust figures depending on the financial conditions of the pension system. This allows the government to make changes to its policies if necessary.
Ultimately, the government can issue the necessary decree by October 31, 2027, and implement it retroactively from January 1. This gives the future government after the presidential elections the opportunity to revert to a complete or partial halt of pension increases if needed.
The proposed legislative draft does not provide information about tax reforms that pensioners will benefit from, which itself indicates other potential avenues for cost reduction.
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