France’s Le Pen seeks to square pension promises with budget reality

By Leigh Thomas

PARIS, Nov 13 (Reuters) – France’s far-right National Rally (RN) will present its pension plans next Tuesday as it seeks to convince increasingly nervous investors that its programme will be affordable if, as opinion polls suggest, it takes power in five months’ time.

Marine Le Pen’s party is seeking to uphold its promise of allowing workers who started young to retire at 60 while limiting the costs of unwinding President Emmanuel Macron’s unpopular pension overhaul.

Pensions are among France’s most politically explosive issues and investors are watching closely for a commitment to raise the retirement age as a sign of fiscal discipline at a time of strained public finances and bond market jitters.

Le Pen said last month she would wring €140 billion ($155 billion) in savings out of France’s budget by the end of the next presidential term in 2032, but has struggled to convince economists and investors that such cuts are achievable.

She has said her pension reforms would save €15 billion to 20 billion a year once fully implemented, a target that could prove hard to achieve if she sticks to longstanding promises to let workers who started particularly young retire at 60.

Le Pen, tipped to win the presidential election in the spring, has also pledged to repeal Macron’s 2023 reform that would gradually raise the retirement age to 64 from 62.

Macron’s overhaul triggered months of protests and left a large share of voters hostile to the reform. The government suspended the plan last year as part of a deal with Socialists to secure parliamentary backing for its budget.

“None of the pension reforms implemented over the last 15 or 20 years have managed to fix the system. So what we want to do is to fix the system,” RN party president Jordan Bardella said this week.

PENSION BURDEN

Pensions are by far France’s single biggest public expense, set to reach €436 billion next year, or 14% of economic output, and politicians have long been reluctant to pass any measures ​that would hurt pensioners’ purchasing power.

Older voters are also a key bloc of supporters for the RN.

Recent comments from RN officials indicate that the party is increasingly inclined to make the number of years worked the key factor for pension eligibility rather than focusing on a single retirement age.

While party officials continue to promise retirement between 60 and 62, they have also said workers would need between 40 and 42 years of contributions for a full state pension, meaning many people who enter the workforce after higher education would still need to work into their mid-60s.

RN budget spokesman Jean-Philippe Tanguy said last month that people would still be able to retire at 62, but would face a reduction in pension benefits if they had not completed the required contribution period.

That approach would allow the RN to retain a flagship electoral pledge while reducing the cost of reversing Macron’s reform, which France’s independent public audit office has said could cost €10 billion annually.

Bardella said the RN would tighten the rules governing contribution periods that count towards pension entitlements and create financial incentives for employers to retain workers old enough to retire who want to stay in work.

The RN would also let workers divert part of their contributions to a sovereign wealth-style investment fund.

France’s pension system is currently financed largely on a pay-as-you-go basis, with workers’ contributions funding current retirees, while private savings for retirement are voluntary.

($1 = 0.9042 euros)

(Reporting by Leigh Thomas; additional reporting by Elizabeth PineauEditing by Gareth Jones)