State debt to supplementary pension agencies under examination

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In June 1998, France's Minister for Employment and Solidarity, Martine Aubry requested an evaluation of the amount of money owed by the state to supplementary pension agencies.

The National Employment Fund (Fonds National pour l'Emploi, FNE), which was created by the government in 1963, runs an early retirement scheme to manage the unemployment situation faced by older workers who have been made redundant. This scheme has been used by sectors undergoing restructuring to remove such workers from the labour market in the years up until full retirement age. The scheme gives these workers a "hybrid" status during the period in between their former job and retirement - people covered by the FNE early retirement scheme are neither workers nor retired people and they receive remuneration which is financed jointly by the employer and the state, and which is subject to the same pension contributions as those paid by active members of the workforce.

In 1984, the government came to an agreement with the supplementary pension agencies - ARRCO (Association des régimes de rétraite complémentaire) and AGIRC (Association générale des institutions de retraite des cadres) - under which it alone would finance the pension contributions in respect of those covered by the early retirement scheme. However, the government has not honoured its commitments. So as not to abandon those workers covered by the early retirement scheme, ARRCO and AGIRC had, until 1 July 1996, covered the government's share to the tune of FRF 13 billion. However, since that date, both supplementary pension agencies have suspended the award of pension rights corresponding to those contributions left unpaid by the government.

The determination shown by both agencies prompted the Minister for Employment and Solidarity, Martine Aubry, to request in June 1998 an appraisal of the extent of the money owed. A complete overhaul of the government's debt is to be studied by both ARRCO and AGIRC and ministerial representatives. A cut in the total liability ensvisaged by certain trade unions and employers' associations could prove problematic to AGIRC, which has financed the FNE to the tune of a total FRF 7 billion while showing an overall deficit in 1997 of FRF 1.2 billion. Given the fact that supplementary pension funds are facing both a difficult financial climate and a political context tending towards a review of those pension contributions that are based on pay, finding a solution to the Government's "oversight" has become a major issue for supplementary pension agencies.