It’s not all that surprising that France, with its generous labour and pension laws would find itself slamming into a brick wall, as pension systems begin to run dry.
FT: Mr Sarkozy favours extending minimum contribution periods for a full pension, rather than raising the standard pension age beyond 60, the official suggested. The contribution period is already set to rise by one year to 41 years by 2012 but should be increased still further.
The aim would be to make reform more politically palatable, but have much the same effect: making people work longer for full benefits. The government was against radical reform, such as introducing UK-style second-tier occupational pensions, big hikes in contribution rates or cuts to pension levels that could more drastically reduce costs, he added. Any such changes would require fundamental modifications to the formula for pension reform agreed in 2003, which could prove politically explosive.
Of course, this is our future, too. Given the projected explosion in both Social Security/Medical costs, there really isn’t an answer other than: more work, less retirement.
As in France, we may choose to play around with accounting a bit in order to disguise what’s going on, and make reforms more “palatable.” Or we may keep borrowing from abroad like crazy, so that our own citizens don’t have to experience sacrifice. All possible. But in the end, that’s our future.