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French Constitutional Council Validates Pension Reform

by Ulrika Lomas,, Brussels

20 January 2014

The French Constitutional Council has validated the Government's pension reform law, designed to guarantee the future of the pension system in France, and providing notably for a progressive rise in employee and employer contributions (décision number 2013-683 DC du 16 janvier 2014). Lawmakers definitively adopted the legislation on December 18, 2013.

In its decision, the Constitutional Council rejected the challenges submitted by over sixty lawmakers, deeming that the disputed provisions are indeed in accordance with the constitution.

Members of the Union for a Popular Movement (UMP) party submitted an appeal to the Constitutional Council challenging Articles 7 and 10 of the pension reform law, relating to "hardships" endured in the place of work. The article expand the existing provisions governing the prevention of hardship.

The provisions state that an employee's "exposure" to one or several professional risk factors, mentioned under Article L 4161-1, above a threshold defined by decree and recorded on a personal form, gives right to the accumulation of "pension points" in a personal hardship account.

The Constitutional Council ruled that these provisions are neither "imprecise nor unintelligible" and made clear that the legislator had not overstepped his competency. Therefore, the new articles are in accordance with the constitution, the Council found.

The Government's pension reform law extends the pension contribution period in the public and private sectors to 43 years by 2035. Furthermore, the legislation provides for a general 0.3 percent rise in employee and employer pension contributions over a period of four years. The text also postpones the date for the annual revision of pensions by six months, now set at October 1.

Finally, the text provides for the creation of a personal prevention of hardship account from 2015, enabling employees exposed to certain hardship factors in the workplace to benefit from a reduced contribution period to gain entitlement to a full pension.

The legal age of retirement, fixed at 62, remains unchanged.

TAGS: tax | pensions | law | employees | retirement | corporation tax | legislation | tax rates | France | tax breaks | individual income tax

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