France’s pension age stays low, whilst New Old 55+ generation increases

Consumer demand


France1 Dec13France, with GDP of $2.6tn, is the 5th and final profile in the blog’s series on the impact of ageing populations on economic growth.  Its importance lies not just in the size of its economy, but also in the fact that its relationship with Germany has been the driving force behind the European Union and the Eurozone.

France is also interesting as it is one of the few Western countries which actively encourages women to have more children. It provides major incentives including monthly allowances, 3 years paid parental leave and subsidised day-care.  The cost of these is large and rising, having reached 15% of the nation’s budget back in 2005.

The UN Population Division’s forecasts for future fertility rates thus show major variation as the chart above demonstrates, as it is impossible to know if the policies will prove successful:

  • Life expectancy (red column) has risen 26% since 1950 to around 80 years today
  • Fertility rates fell 30% from their 1960 peak of 2.8 to just 2.0 babies per woman by 2005
  • In the Low Case (green area) they fall further to 1.5 babies by 2030
  • In the Medium Case (triangle) they stabilise at 2.0; and rise to 2.5 in the High Case (square)

One success for the policy has been that France saw its birthrate pass Germany’s in 2000 for the first time in modern history, and it is now 18% higher at 790k births/year.  But this is mainly due to the decline in Germany’s birth rate.  And  in terms of economic growth, these new babies will only begin to have an impact once they reach the Wealth Creator 25 – 54 age group.

Thus the key issue for the next 10-20 years is the legacy of the declining number of births after 1972’s peak of 880k/year.  France’s recent policy shifts will not change the fact that its current BabyBoomer population is ageing fast.

As the new OECD Pension  Book highlights, 30% of the working age population are already over 65 years.  Yet remarkably, France has been reducing its pension age to 60 years – even whilst its life expectancy was rising.  Reforms passed in 2010 are slowly reversing this policy, but pension age will still be only 62 in 2017.

  • Average earnings are $48k per worker
  • The public pension currently provides a 50% pension after 40 years work in 2010, rising to 41.5 years by 2017
  • The earnings measure is the average of the best 25 years’ earnings, with a ceiling of €36k
  • Private pensions are also important, but are too complex to be summarised in a blog post

Thus the OECD calculate that gross pensions are nearly as generous as in Germany at 48% of median earnings.  The problem is simply that they are unlikely to be affordable for much longer:

  • 1 in 3 of the adult population were already in the New Old 55+ generation in 2000
  • The New Old total 40% today, and will be almost 1 in 2 of the adult population by 2030

France is thus a useful example of how governments have chosen to ignore the reality of ageing populations, due to their focus on the short-term electoral cycle.  There has been no debate about whether it is medically and mentally better, or worse, for people to retire at an early age.  Nor has there been a debate about the wider economic costs.

The result is that we face an economic and social crisis, for which there are now no ‘easy solutions’ available.  20 years ago, it would have been relatively easy to index pension age to life expectancy.  Most people would have complained a little, but then shrugged their shoulders and got on with their lives, on the principle that ‘what you never had, you never missed’

But that is not the position today.  As investment magazine Barron’s observed about the US’s failure to properly address its pension issues:

It is difficult enough to put 50-year-olds on notice that entitlements they expect at 70 will probably not be available. To give them this bad news when they’re 60 or 65 is inhumane.”


German New Olders have cash to spend, but few companies bother with their needs


Germany is the world’s 4th largest economy ($3.4tn), and so is the next to...

Learn more

Age range and income level key to future corporate profits


Every parent believes their children are above average – more beautiful an...

Learn more
More posts
Hertz goes bankrupt as non-essential consumer demand disappears

The US Federal Reserve has now spent $7tn bailing out Wall Street. But it couldn’t save the 10...

Smartphone sales head into decline as affordability becomes key

The smartphone sales decline accelerated in Q1, as Strategy Analytics report: “Global smartpho...

China’s plastic ban and recycling launch marks end of ‘business as usual’ for plastics industry

Paradigm shifts start slowly at first, and it is easy to miss them. But then one day, they suddenly ...

Automakers face stiff headwinds in big emerging markets

Brazil, Russia, India and China disappoint as manufacturers face investment demands of EVs © Bloomb...

Portugal shows the way to climate neutrality by 2050

“If you don’t know where you are going, any road will do”. The Irish proverb’...

The next billion phone users will be buying $10 smart feature phones, not $1000 iPhones

Smartphone sales plateaued in Q3, down 9% since Q3 2017’s peak of 1.55bn, as the chart shows....

Companies ignore the Perennials 55+ generation at their peril

Nearly a third of the the world’s High Income population are now in the Perennials 55+ generat...

Auto markets set for major disruption as Electric Vehicle sales reach tipping point

Major disruption is starting to occur in the world’s largest manufacturing industry.  Hundred...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more