SOS Retraite: the French need help
When it comes to approaching retirement savings, we tend to kick in! Yet we are all more or less aware that our pensions are in danger.
Money, finance, investments… terms that are still taboo in France! So when it comes to approaching retirement savings, we tend to kick in! However, because we have been told it for years in the media, and the subject comes back to the table with each new five-year term, we are all more or less aware that our pensions are in danger. A concern expressed by at least two thirds of French people who believe that the amount of their future pensions will not be sufficient to live properly in retirement. If they rely solely on the current pension system, their concern may be confirmed. Indeed, the current system will not be sufficient for a majority of French retirees in an increasingly near future. Also, once we have the capacity, it is essential to anticipate and start saving to compensate as much as possible for this drop in future income. However, it would still be necessary to know how to do it. And in this game, the French are far from having all the cards in hand to play the game well.
A historically generous French retirement system that is running out of steam!
The system of pay-as-you-go retirement that we know, generalized in France during the Second World War in a context of baby boom and strong economic growth, made it possible to provide French employees with “decent” pensions for years, without them worrying about preparing for their personal retirement. Also, with the exception of some socio-professional categories who benefited from less advantageous systems (craftsmen, traders, farmers, liberal professions, business managers, etc.), the low discount between earned income and pensions paid thanks to the pension schemes in place until now n did not encourage the French to be far-sighted and to save to supplement their pensions. The majority of French people are therefore not very experienced and knowledgeable in terms of savings products compared to their European neighbors.
However, in view of the evolution of current demographics (increase in life expectancy, difference between the proportion of working people and retirees in particular), the budget of the pension system is now totally unbalanced. It is obvious that the current system will not be sufficient to serve the same levels of pension than before to all French people, whatever their level of income in activity. It is therefore essential that everyone be aware of this. We hear a lot of people say, especially among the younger generations, that retirement “there won't be!”. It is precisely because it is partly true that it is advisable to anticipate it and to take charge in order to prepare for it.
French people angry with finance
Even though there is growing concern in the country on the subject of pensions, only 1 in 5 French people say they have already taken steps to prepare them financially. And this is not surprising: 77% of French people believe they have little or no knowledge of savings! This lack of financial knowledge leads them to postpone this moment of preparation for retirement, which comes much later in France than among the average of our fellow Europeans, for example. When we know that the amount of savings necessary to obtain around 1 euros of monthly pension at retirement is around 000 euros, the urgency of this anticipation becomes immediately more concrete!
Because they do not master them sufficiently, the French are also very suspicious of savings products in the broad sense, and even more of retirement savings products that they often consider opaque and above all too risky. They often prefer to rely on more secure and liquid precautionary savings products such as A booklet or the euro fund of their life insurance or more tangible such as real estate. Products whose yields have been declining for more than a decade, which are not suited to preparing for their retirement and which are in many cases underperforming (the livret A rate has been lower than the rate for years. inflation).
A duty to educate and support institutional actors
The lack of transparency, advice and support on the part of the majority of financial players is a major contributor to this mistrust and lack of interest on the part of most French people towards financial institutions. financial products. The lack of economic and financial education in France must also be questioned when we know that in some of our European neighbors, these concepts are addressed from primary school.
For the French to become fully aware on an individual basis of the need to prepare well for their retirement, and to adopt the right methods to do so, they must have all the cards in hand. And for this, a collective awareness on the part of the State, savings managers and insurers as to their essential role in financial education is just as essential.
The first initiatives were born to overcome this lack of knowledge and simplify existing products such as the creation of the Retirement Savings Plan (PER) or more recently, the “Savings meeting”, online conferences to promote the financial culture of French people created at the initiative of ACPR et AMF. All this is not enough. Although, since the beginning of the year, we have been proud of the success of this famous PER in terms of collection, this collection remains concentrated on too small a fringe of the population.
And the companies in all this?
2 in 3 French people also believe that it is up to the company to participate in improving the level of retirement of its employees, and they are even 72% to consider that companies should be obliged to set up a system of retirement. retirement savings like the company mutual. So that the French can prepare for their retirement under the best conditions, companies indeed have a real social role to play for their employees. The State is starting to push in this direction, with tax incentives in particular, although sometimes timid (exemption of employer contributions, premiums paid deductible from taxable profit, social package at 16% instead of 20%), but there are still too few companies that set up this type of system for all of their employees.
If the French continue to think that they can only count on a welfare state for a peaceful retirement, and that the preparation for their retirement begins after 45 years, they are deluding themselves. If the state, banks and insurers think that the French will reconcile with finance tomorrow and save massively for their retirement, they are deluding themselves just as much. It is urgent that a collective and individual awareness on the need to educate the French to prepare for their retirement takes place on the part of all stakeholders if we do not want to leave some of our future seniors on the side of the road! Individuals, companies, institutional players, the State, tomorrow's retirement must be everyone's business.
The entire France FinTech team, its members and partners wish you a happy new year 2021!
By Geraldine Russell, for Maddyness