Annexes
Pension system
Full reasoning, trade-offs, scenarios and 20-year projections
Methodological precaution
The figures presented are orders of magnitude built from official COR, DREES, INSEE, IFRAP and Cour des comptes data: raw facts only, not political interpretations. The 20-year projections rest on explicitly stated assumptions. Precise costing and formal validation are delegated to competent economists.
On the deficit used as reference
The deficit of the pension system publicly displayed by the Conseil d'Orientation des Retraites is small (~€1.7 billion in 2024, ~€6 billion in 2030). This figure is not the real deficit: it includes among the system's revenues the balancing subsidies paid by the state to civil service schemes (~€52 billion/year) and to special schemes (~€8 billion/year), as well as transfers from other branches of Social Security (~€17 billion/year).
These transfers are not own resources of the system: they are expenditures from the State's general budget that come to fill the structural deficits of public schemes. Presenting the system as "almost balanced" amounts to concealing the real cost.
The present document uses as reference the gross structural deficit, that is, the gap between pensions paid (~€330 billion/year) and direct contributions alone (~€250 billion/year), i.e. ~€82.5 billion/year. This figure, validated by the analyses of the Cour des comptes (February 2025) and the IFRAP, is the one that measures the system's real financing need. It represents approximately one third of the State's total budget deficit (€166 billion in 2024).
It is this real deficit that the proposed mechanism aims to eliminate. Any political presentation contrasting the "COR's €1.7 billion" with this project's costing amounts to a biased comparison between apparent balance and real balance.
1. Pensions as a sovereignty issue
Pensions are not just another social issue. They are a lever of sovereignty in their own right, just as much as currency, energy or borders. A state that does not control the financing of its population's aging is not a state that decides freely.
The current system accumulates three structural vulnerabilities incompatible with a project of restored sovereignty.
Demographic dependency. The active-worker-to-retiree ratio is structurally deteriorating: from 4 to 1 in the 1960s, to 1.7 today, toward 1.4 by 2040 according to the COR. A system built on a continuously deteriorating ratio is structurally condemned to permanent reform.
Dependency on foreign financial markets. Any classic private capitalization scheme transfers French workers' savings to funds that optimize global returns with no obligation to serve the national economy. The American example demonstrates this: CalPERS, Vanguard, BlackRock manage trillions of dollars in American pension savings and invest massively outside the United States. They want returns, not patriotism.
Dependency on external budgetary constraints. The financing of the pension deficit is conditioned by the European rules of the Stability Pact. Exiting the European Union mechanically removes this constraint.
2. Diagnosis of the current system
| Value | Source | |
|---|---|---|
| Total pension expenditure | €330 billion/year | DREES 2023 |
| Number of retirees | 17 million | DREES 2023 |
| Number of contributing workers | 28 million | INSEE, Emploi 2023 |
| Contributions collected | ~€250 billion/year | COR 2023 |
| Gross structural deficit | ~€82.5 billion/year | IFRAP / Cour des comptes 2025 - gross revenue/expenditure balance excluding public transfers |
| Active-worker-to-retiree ratio 1960 | 4.0 to 1 | COR 2023 |
| Active-worker-to-retiree ratio 2023 | 1.7 to 1 | COR 2023 |
| Active-worker-to-retiree ratio 2040 | ~1.4 to 1 | COR, central scenario projections |
| Average gross monthly pension | €1,509 | DREES 2023 |
| Share of pensions in GDP | ~13.8% | COR 2023 |
| Cost per year of advance/delay | €12 to 15 billion/year | COR - central estimate €13 billion |
Note: The €82.5 billion/year deficit corresponds to the gross contributions/expenditure balance excluding compensatory public transfers (balancing subsidies to civil service schemes ~€52 billion/year, to special schemes ~€8 billion/year, internal Social Security transfers ~€17 billion/year). This is the honest measure of the system's real financing need.
3. The model adopted - two-tier architecture
Neither pure pay-as-you-go, whose sustainability is compromised by demographics, nor private capitalization, which transfers national savings to foreign markets. A third sovereign path: pay-as-you-go for the universal base, CDC fund for the supplement.
3.1 First tier - sovereign pay-as-you-go
The universal base remains financed by workers' contributions. A founding principle of 1945, non-negotiable. It guarantees the most modest retirees a stable and predictable income independent of the markets. Social Security is backed by the sovereign Banque de France, without structural debt imposed from outside.
3.2 Second tier - CDC reserve fund
Sovereign capitalization, not private capitalization. The difference is fundamental.
| Private fund (American model) | Sovereign CDC fund | |
|---|---|---|
| Manager | BlackRock, CalPERS, Vanguard... | Caisse des Dépôts (State) |
| Objective | Maximum global return | Real national economy |
| Investments | International markets | French real assets only |
| Instruments | Equities, derivatives, global bonds | French State bonds, holdings in French companies, national infrastructure |
| Exchange-rate exposure | High - foreign currencies | None - franc only |
| Crisis risk | Possible collapse | Pay-as-you-go base guarantees the minimum |
| Inflation | Fixed-rate bonds vulnerable | Real assets track inflation |
| Governance | Private boards of directors | Planning Commission steers, Bercy implements, HCEP evaluates annually |
Strict separation of institutional roles
The Planning Commission steers investments according to sovereign priorities: reindustrialization, energy, infrastructure. The Bercy minister is personally and criminally liable for financing decisions. The HCEP evaluates performance annually and publishes its results. It does not govern, it does not plan, it measures and reports. The one who plans cannot be the one who evaluates.
Funding and distribution mechanism of the fund
Two distinct financial flows drive the system, which must be read separately to understand the complete mechanism.
The first flow is the progressive diversion of contributions toward the CDC fund. Today, 100% of the €250 billion/year in contributions go to pay-as-you-go. Going forward, a growing share of these contributions is diverted toward sovereign capitalization, following a linear trajectory: 10% from year 1, 17.5% by year 5, 25% by year 10, 32.5% by year 15, 40% by year 20. This progression (7.5 points every five years) results in an established regime of 60% pay-as-you-go / 40% capitalization. The CDC fund receives €25 billion/year at the start, then €100 billion/year once established.
The second flow is the new progressive levy on pensions paid out (step 4 of the reasoning). Stable from year 1, progressive by bracket, this levy goes entirely toward filling the pay-as-you-go deficit. It does not feed the CDC fund. The fund is fed solely by the progressive diversion of contributions.
This separation is structural. It allows two objectives to be dissociated: building sovereign capital through progressive diversion, and supporting pay-as-you-go during the transition through the progressive levy on pensions.
Composite pensions: how the shift happens without disruption
The progressive shift from 100 PAYG/0 capitalization to 60 PAYG/40 capitalization does not break pay-as-you-go because each new retiree sees their pension recomposed proportionally to the capitalization rate at the time of their retirement. A retiree leaving in year 1 receives 90% of their pension via pay-as-you-go and 10% via capitalization (virtually during phase 1, effectively from year 11 onward). A retiree leaving in year 20 receives 60% via pay-as-you-go and 40% via capitalization. The total pension remains equivalent to what it would have been under 100% pay-as-you-go.
This mechanism is invisible to the retiree in terms of the final amount received. It is only visible in the source of funding: a growing share comes from the CDC fund, a shrinking share comes directly from workers' contributions.
Capitalization phase and distribution phase
The fund operates in two successive phases. During the first ten years, all contributions and the entirety of the returns remain in the fund. No distribution. The stock grows cumulatively to approximately €500 billion by the end of phase 1.
From year 11 onward, the distribution phase begins. Out of an annual return of 4% on the stock, 0.5 point is reinvested so the fund continues to grow, and 3.5 points are distributed to eligible retirees in the form of a capitalized pension.
Distribution by individual gauge
The fund's annual distribution is shared among all retirees living at the time of payment, weighted by an individual gauge that combines national solidarity and effective contribution.
The gauge is composed of two elements weighted 50/50. The universal component (50%) is the same for all French retirees, reflecting the principle that the fund is a national common good. The contributive component (50%) is proportional to the years contributed under the new regime, capped at 40 years equating to 100%.
A retiree who left before the reform has a gauge of 50%. A retiree leaving in year 20 with 20 years contributed post-reform has a gauge of 50% × (20/40) + 50% = 75%. A retiree with 40 full years contributed post-reform has a gauge of 100%.
Bonus for long careers starting before age 18
Years contributed before the age of 18 are counted with a coefficient of 1.5 in the contributive component, valorizing apprenticeship pathways and transmission trades.
The bonus is conditional on two cumulative criteria: at least three full years contributed before age 18, within a recognized qualifying pathway (CAP/BEP/Bac pro apprenticeship, compagnonnage, technical or professional pathway identified by the Planning Commission).
The bonus is applied retroactively to current retirees and workers who contributed before age 18 under these conditions.
An apprentice who started at age 16, contributed for 4 years before age 18 and then 43 years afterward until age 63, has a contributive component of (43 + 4 × 1.5) / 40 = 122.5%, i.e. a gauge of 50% × 122.5% + 50% = 111%.
Cap on public pensions
The cap applies to the sum of all pensions paid by the universal public system (pay-as-you-go + capitalization), set at 3.5 times the net SMIC (~€4,900/month in 2025 value) in the central scenario, within an indicative range of 3 to 4 SMIC.
Beyond this cap, the pension no longer increases, regardless of the gauge. A senior executive with a gauge of 110% and a theoretical pension exceeding the cap has their pension stabilized at the cap: their excess contribution becomes solidarity-based support to the system.
This cap only concerns the universal public system. Optional private supplementary schemes and individual savings remain entirely the property of their beneficiary.
Additional removal of the 10% allowance on pensions
Beyond the overhaul of the single progressive levy (CSG/CRDS/CASA/health insurance contribution replaced by the bracket-based scale), the project also removes the 10% tax allowance applied to pensions in the calculation of income tax.
This allowance, created in 1948 by aligning it with the professional allowance for working people (which at the time covered their professional expenses), no longer has any justification once people have retired. Retirees do not bear professional expenses. Maintaining this allowance constitutes a pure tax loophole, which reduces retirees' taxable base with no offsetting rationale. Its removal is consistent with the principle of fiscal unification between retirees and workers established by the overhaul of the progressive levy on pensions.
The measure does not affect retirees below the income-tax threshold (40 to 45% of retirees, pensions under approximately €17,000/year for a single person), who already pay €0 in income tax. It affects taxable retirees, at a rate that increases with their income.
Current budgetary cost of this loophole: approximately €5 billion/year. Its removal yields €5 billion/year in new tax revenue. No compensation mechanism is introduced: the measure falls under pure fiscal fairness, in line with the project's doctrine of transparency (no loophole without justification, no compensation mechanism that would blur the message). Since modest-income retirees are already non-taxable, the measure does not affect them.
Effect on the budgetary trajectory: +€5 billion/year in new revenue, i.e. +€4.3 billion/year with the 15% prudential discount, from year 1.
Effect on the pension system: none. The 10% pension allowance is a general tax mechanism, not a mechanism of the pay-as-you-go system. Its removal feeds the State's general budget, not the pension system.
The France-only dedicated account for the capitalized share
The capitalized share of the pension is paid into a dedicated account, separate from the retiree's regular bank account. This account has three characteristics. It can only be spent in France with identified French establishments (technically backed by a dedicated payment card that automatically validates the French nature of the recipient). No cash withdrawal is possible. No transfer to a foreign bank account is authorized.
This architecture ensures that the capitalized pension necessarily flows into the national economy: approximately €44 billion/year of consumption captured within the territory by year 20, ~€164 billion/year by year 50.
The pay-as-you-go share continues to be paid into the regular bank account with no usage restriction.
Exceptional mobilization clause
The return on the CDC fund is in principle entirely dedicated to distribution to eligible retirees. However, in the event of a major crisis recognized as such by the reformed Senate by absolute majority (war, national natural disaster, systemic economic shock, large-scale pandemic), a temporary fraction of the annual return may be allocated to another identified sovereign need.
3.2 bis - Coordination with existing supplementary schemes (AGIRC-ARRCO and others)
The CDC fund does not replace the existing mandatory supplementary schemes (AGIRC-ARRCO for private-sector employees, IRCANTEC for non-tenured public employees, RAFP for civil servants, and the schemes for self-employed professionals). These schemes, jointly managed by labour and employer representatives, have demonstrated their historical resilience and are today balanced or near-balanced. Absorbing them into a single scheme would be a structurally complex, politically costly operation, with no clear short-term benefit for sovereignty.
The principle adopted is therefore as follows: maintaining joint management, extending sovereignty over investments
Obligation to invest in French assets
The reserves of all mandatory supplementary schemes - approximately €150 to €160 billion in cumulative assets - are progressively redirected toward exclusively French assets. This principle extends the CDC fund's doctrine to the supplementary scheme scope: the collective pension savings of the French finance the French economy.
The scope of the obligation covers all mandatory-affiliation supplementary pension schemes. Individual private pension savings mutuals and private supplementary pension contracts remain free in their investments: they fall under an individual choice whose risks are borne by the subscribers.
Definition of eligible French assets
The following are considered eligible French assets:
- bonds issued by the French state, local authorities and French public institutions
- real estate located on French territory (mainland and overseas)
- securities of companies headquartered in France, whose executive committee is majority composed of French citizens, and over which the sovereign golden share is activated (protection against any non-sovereign takeover)
The list of eligible companies is validated by the Planning Commission, published and reviewed annually. A company that drops off the list during the year - following a change in shareholding, headquarters or executive committee composition - does not trigger a forced sale of already-held securities, but immediately prohibits any new purchase. The reduction of the non-compliant stock follows the general 20-year compliance timeline.
Compliance timeline
The addition of non-French assets to reserves is prohibited immediately upon implementation of the measure. This prohibition stops the bleed without creating a shock to balance sheets.
Full compliance of the existing stock is progressive over 20 years, with no forced sale and no binding annual schedule. Non-French bonds mature and are not renewed. Non-French equities and holdings are sold off gradually according to market opportunities. Non-French real estate is reallocated during ordinary portfolio rotations. This long timeline avoids any destruction of value and any distortion of French markets from a sudden inflow of liquidity to be invested.
Control and governance
Three institutions are involved according to distinct and complementary roles:
The Autorité de contrôle prudentiel et de résolution (ACPR), strengthened in resources and prerogatives, ensures the annual technical control of compliance with the obligation and the prudential quality of investments.
The Planning Commission validates the list of eligible assets and arbitrates complex qualification cases
The HCEP evaluates ex post compliance with the obligation, publishes an annual public report on each scheme's compliance trajectory, and may refer the matter to the reformed Senate in cases of a clearly established failure to comply.
In the event of confirmed non-compliance, the scheme has 12 months to dispose of non-compliant assets, failing which it is subject to progressive financial penalties and reinforced prudential administration.
Scope of the constraint: geography only, not strategic orientation
The constraint applies exclusively to the geographic location of investments - French assets only - and not to their composition or sectoral orientation. The joint managers of AGIRC-ARRCO and other schemes retain full responsibility for the choice between equities, bonds, real estate, and the allocation across sectors within the French scope. This preservation of joint management is deliberate: the sovereign state sets the framework - French money finances France - but does not manage in place of labour and employer representatives. This logic is consistent with the project's general principle: the strategist state sets the rules, responsible actors practice their trade within them.
This investment obligation forms part of the systemic retention effect described in Part IV: combined with the universal golden share, conditioned state aid and the French orientation of the CDC fund, it contributes to a system in which anchoring in France becomes the rational capital-equilibrium position for French companies.
What this architecture produces
The French pension system is then structured into three coherent and sovereign tiers:
- Universal base on a pay-as-you-go basis, financed by contributions, backed by the sovereign Banque de France
- Joint supplementary schemes (AGIRC-ARRCO and equivalents), managed by labour and employer representatives, with reserves mandatorily invested in French assets
- Sovereign CDC fund, fed by the progressive diversion of contributions, managed by the Caisse des Dépôts under the supervision of the reformed Senate.
A revisable architecture on a generational horizon
This three-tier architecture is not set in stone. It responds to a pragmatic imperative of the transition: maintaining what works, reorienting without breaking, concentrating political energy on the priority fronts (EU, NATO, currency, industry). Over a horizon of 20 to 30 years, once sovereignty has been consolidated and the CDC fund's tools have proven themselves, the question of a deeper integration of supplementary schemes into a unified sovereign system may be reexamined. This revision will then be based on observed results, not on a fixed doctrinal principle. The people will have the final say by referendum, as for any major change to the institutional architecture.
The entirety of French collective pension savings finances the French economy, without the state having had to absorb historical joint management. This is the sovereign compromise: rigour in the direction set, respect for preexisting institutional balances that work.
3.3 Protection against inflation
Holdings in producing companies and national infrastructure are real assets whose value mechanically tracks inflation: the opposite of fixed-rate bonds, whose real value erodes when inflation exceeds the nominal rate. The CDC fund is structurally protected against imported inflation in the short term, precisely the kind that can be anticipated during the monetary transition.
3.4 International context of the target stock
The fund's target stock at 20 years - approximately €1,360 billion in the central scenario - may seem ambitious. It is in fact modest relative to the French population, and fits within a trajectory that continues to grow beyond the transition phase.
| Stock | Population | Stock per capita | |
|---|---|---|---|
| Norway (GPFG) | ~€1,900 billion | 5.5 million | ~€345,000/capita |
| China (CIC + SAFE) | ~€2,500 billion | 1.4 billion | ~€1,800/capita |
| Singapore (GIC + Temasek) | ~€800 billion | 5.8 million | ~€138,000/capita |
| France - CDC fund (20-year target) | ~€1,360 billion | ~69.5 million | ~€19,600/capita |
| France - CDC fund (30-year target) | ~€2,450 billion | ~69 million | ~€35,500/capita |
Source: INSEE, central scenario population projections 2026 (published June 2026).
At 20 years, France reaches a stock comparable to Singapore's in absolute value, but 7 times lower relative to population. At 30 years, the stock per capita doubles and approaches the standards of the most advanced small sovereign nations. This is not an excessive ambition, it is a historical lag to be progressively caught up.
4. Step-by-step reasoning - steps and trade-offs
This section documents the entire reasoning process that led to the parameters adopted. Each step, each trade-off, each assumption is explicitly stated.
Step 1 - The starting deficit
The pay-as-you-go system has a deficit of €82.5 billion/year: the difference between €330 billion in expenditure and €250 billion in contributions. This is the starting point of the entire reasoning. This deficit is included within the overall budget deficit of €150 billion/year. There is no double counting.
Step 2 - The cost of bringing forward the retirement age
Each year by which the retirement age is brought forward costs an additional €13 billion/year to the pay-as-you-go system. The COR estimates this at between €12 and 15 billion, with a central value of €13 billion. This is an expense, not a saving: it represents a step back relative to the 2023 Macron reform, which set the age at 64. Moving to 63 costs €13 billion/year. Moving to 62 costs €26 billion/year. Moving to 60 costs €52 billion/year.
Step 3 - The levy on high pensions
The project entirely overhauls the existing levies on pensions. Today, retirees are subject to four distinct levies: CSG (rate varying from 0 to 8.3% depending on the reference taxable income), CRDS (0.5%), CASA (0.3%) and the health insurance contribution on supplementary pensions (1%). This system is complex, caps at around 9.4% with no real progressivity beyond that point, and feeds several separate funds (health insurance, CADES, CNSA) without supporting the pension system.
The project replaces these four levies with a single progressive levy applied according to a scale of successive brackets (the French income-tax method), directed exclusively toward filling the pay-as-you-go deficit. This mechanism combines simplicity, genuine progressivity and a coherent allocation of revenue.
Scope of the levy and single destination
The levy applies to the total pension paid to the retiree, including the base scheme (general, civil service, agricultural, self-employed, special schemes) and supplementary schemes (AGIRC-ARRCO and equivalents). It does not alter the internal operation of the supplementary funds, which continue to make their payments according to their own rules. The mechanism operates as a single public levy applied to the total pension.
The entirety of this levy is directed toward filling the pay-as-you-go deficit, and never toward the CDC fund. This allocation is structural: it allows the transitional support mechanism (levy toward the deficit) to be dissociated from the sovereign capitalization mechanism (diversion of contributions toward the CDC fund), treated as two separate flows with distinct purposes.
Maintaining current levies on workers
The overhaul concerns only pensions. The CSG on earned income (9.2%), on capital income, and the associated CRDS remain unchanged for workers and continue to feed their current funds. Only the levies on pensions are overhauled within the new single progressive mechanism.
Compensation for revenue lost by other branches
The removal of the CSG, CRDS, CASA and health insurance contribution on pensions creates an annual shortfall for their current beneficiaries:
| Annual revenue lost | |
|---|---|
| Health insurance (CSG health share) | ~€6.5 billion/year |
| CADES (CRDS, social debt) | ~€0.5 billion/year |
| CNSA (CASA, autonomy) | ~€0.3 billion/year |
| Health insurance contribution on supplementary pensions | ~€2.5 billion/year |
| Total to be compensated | ~€9.8 billion/year |
This compensation is addressed within the project's overall budgetary costing (annex dedicated to the transition). It draws on savings in state operating costs, revenue from reindustrialization, and, where necessary, calibrated monetary creation. As CADES is scheduled for extinction (planned for 2033), its share of €0.5 billion/year is not critical. Compensation to health insurance and to the CNSA is prioritized.
Step 4 - The progressive levy scale
The single progressive levy operates through successive brackets, like French income tax. Each rate applies only to the portion of the pension within the relevant bracket, ensuring continuous progressivity with no threshold effect.
| Gross pension bracket | Marginal rate | |
|---|---|---|
| Below 0.5 SMIC (< €901/month) | 0% | |
| 0.5 to 0.75 SMIC (€901 - 1,352) | 5% | |
| 0.75 to 1 SMIC (€1,352 - 1,802) | 10% | |
| 1 to 1.25 SMIC (€1,802 - 2,252) | 15% | |
| 1.25 to 1.5 SMIC (€2,252 - 2,703) | 20% | |
| 1.5 to 1.75 SMIC (€2,703 - 3,154) | 30% | |
| 1.75 to 2 SMIC (€3,154 - 3,604) | 40% | |
| 2 to 2.25 SMIC (€3,604 - 4,054) | 55% | |
| 2.25 to 2.5 SMIC (€4,054 - 4,505) | 70% | |
| Above 2.5 SMIC | 100% |
This scale combines two complementary mechanisms. The automatic capping at 2.5 SMIC captures everything above it, approximately €3.1 billion/year based on an income base of €6,000 gross pension for the last bracket (a highly uncertain figure, to be confirmed). The progressive bracket-based levy on pensions above 0.5 SMIC but below the cap captures approximately €13.5 billion/year. The total yield is in the order of €16.6 billion/year, directed entirely toward filling the pay-as-you-go deficit.
Real effort by retiree profile
The successive-bracket scale produces continuous progressivity with no threshold effect: