The French government will raise the retirement age from 60 to 62 as part of a sweeping overhaul of the pensions system.
‘It is imperative that we salvage our pensions system,’ Labour Minister Eric Woerth told a news conference.
‘Working longer is inevitable. There is not magical solution’, he said.
Talk of raising the retirement age has been taboo in France where the right to a pension from age 60 has been enshrined since 1982, a legacy of Socialist president Francois Mitterrand's administration.
Currently anyone can draw a full pension in France at the age of 60 so long as they have paid social security contributions for at least 40.5 years. This is set to rise to 41 in 2012.
From the age of 65 anyone can retire without penalties even if they have not worked the full 40.5 years. Private sector employees can work to 70 if they wish, while the upper threshold is 65 in the public sector.
In some jobs, deemed especially wearing, it is possible to retire as young as 50.
According to EU statistics office Eurostat, French left the workplace at an average age of 59.4 in 2007 against a European average of 61.2.
According to the Labour Ministry, there are some 15.5 million pensioners in France, out of a population of some 65 million. This figure is set to rise to 18 million in 2030 and 23 million in 2050.
Public sector workers retire on 75% of their final six-month salary. Private sector workers get 50% of their earnings in the 25 best years, plus contributions from additional schemes. This tends to balance out payments. The average pension in 2008 was €1,122 a month (€825 for women, €1,426 for men).
Civil servants have 7.85% of their salary deducted each month for pensions contributions versus 10.65% for private sector workers.
According to the state Pensions Council, the annual pension deficit is forecast to reach €32bn in 2010. This is projected to rise to €80bn in 2030 and €114bn by 2050 without reform.
Pension spending in France represented 13.3% of GDP in 2007, according to statistics office INSEE against an EU average of 11.8%. The government says pension spending has now hit 14.4% of GDP.
The Organisation for Economic Co-Operation and Development says French pensioners claim retirement benefits for an average of 24 years for men and 28 years for women - a longer period than in any other developed nation. Life expectancy is still climbing which means this figure is also climbing.
Successive governments have tried to tackle the problem without resolving the issue. In 2003, current prime minister Francois Fillon introduced a major overhaul that lengthened the time people had to pay contributions before getting a full pension.
In 2007, President Nicolas Sarkozy got rid of a number of privileges for certain public sector workers. The government hopes the next reform will settle the problem once and for all.
