the debate between Gabriel Attal (Renaissance) and Sandrine Rousseau (EELV)

This text corresponds to part of the transcription of the debate above. Click on the video to watch it in full.

Caroline Roux: Good evening Sandrine Rousseau, thank you for accepting this debate. I imagine that you listened carefully to what Gabriel Attal said about the fall of a taboo, the opening to a share of capitalization so that in the end this social system continues and we can finance pensions later. What do you think?

Sandrine Rousseau: I was reading the economic press today to come and debate with you, and I see that, for example, there is the real threat of the AI ​​bubble bursting in the coming weeks, in the coming months. We don’t know when this will happen, but there are many financial market analysts who are worried about this artificial intelligence bubble bursting. And a funded retirement means that people who are 80, 90 years old, who are retired, some already in EHPAD, could fear this bubble bursting. They could fear that if this bubble bursts, they would no longer have the means to pay for the EHPAD. And that’s what capitalization is, it’s truly getting out of the serenity of the pension amount. Because in fact, there is a part of our retirement pension which will depend on the financial markets, on speculation on the financial markets. And I can tell you, as an ecologist, that the relative stability of financial markets that we have known so far is extremely threatened by global warming, by climatic hazards and the collapse of biodiversity. And so, when we say to ourselves that we are going to put our working lives in the hands of people who will try to maintain our retirement by speculating on the markets, then, truly, we are putting the lives of people at risk in old age.

The pay-as-you-go system has had one great virtue: it guarantees a standard of living for the poorest and for people who are retired today. We have a standard of living for retired people today which is satisfactory, which is at the top of the European average. And in fact, capitalization means giving up that. I tell you, I find that there is something of an inability to understand that when you have given your body for an entire career, when you have pain everywhere, when you are old, you don’t want to worry about knowing what the amount of your pension will be tomorrow.

Gabriel Attal: What I am proposing is a capitalization pillar. It’s not about changing our pay-as-you-go system, it’s about keeping it and having an additional pillar to improve retirement. That’s the first thing. The second thing is that there are a certain number of countries which have a capitalization system, and for a certain number, they have had it for a long time. And they experienced financial crises. The crisis of 2008, and the serious stock market crises of the 1970s. And yet, all the studies show, people who were in a capitalization system, even though there may have been financial crises, had a better return than in a pay-as-you-go system. All the economic studies that have been done show this. This means that even though you may have had economic crises at one point, over a career of 40, 42, 43 years, over time you are a winner compared to the pay-as-you-go system. That’s the reality.

And then obviously, capitalization system, capitalization pillar, you “liquidate” it, you get it back when you retire. You have what is called an annuity which you then keep for your retirement. So the example you give of a person in EHPAD who is 90 years old, their pension does not decrease in a capitalization system since they liquidated their retirement pension by capitalization, they receive an annuity which was accumulated while they worked thanks to our economy. Because what bothers me in your reasoning is two things. The first is that you talk about financial bubbles on capitalization. You never talk about the bubble that threatens our pay-as-you-go system, it’s the demographic bubble. You said “Our pay-as-you-go system had great virtue”, and I thank you for this honesty because it belongs to the past.

Caroline Roux: Do you consider the pay-as-you-go system to be a thing of the past? We are not able to pay pensions if we keep this same model, is that what you mean?

Gabriel Attal: In any case, I think that if we want to have good pensions for the French, we must add a new capitalization pillar. For what ? How does our retirement system work today? The contributions that are deducted from your salary on the 28th of the month when you work will immediately pay the pensions of retirees on the 2nd of the following month. 40 or 50 years ago, there were four people working for one retiree. So that was a lot of contributions to pay for their retirement. In the early 2000s, there were two people working for a retiree. Today, we are close to a person who works for a retiree.

Caroline Roux: It doesn’t hold anymore. Demographically, it no longer holds.

Sandrine Rousseau: It absolutely holds: the Pension Orientation Council made forecasts based on a birth rate in France of 1.8 children per woman, which maintains the pay-as-you-go system. The body is not saying that there is a collapse of our pay-as-you-go system. It’s very interesting what you say, because you’re passing the buck to me, but I could throw it back to you in the same way. You keep a distribution base because you believe that this is safe. So in fact, you support the argument that is mine… Moreover, there is still something which is that the model that you recommend is a model of “everyone for their retirement”, whereas what has made France strong, and I think that it is even its primary identity, in reality, because we are bombarded from morning to evening with the French identity, but the reality of French identity is that we made a radical and audacious choice at the end of the war, which consisted of saying that we were putting a significant part of our wealth in common to face crises in a united and collective way.

Gabriel Attal: It was not the same part of our wealth as today. Today, our pensions are 14% of GDP. At the time you mention, there was an explosion in the birth rate. This is no longer the case today. It can’t work the same anymore.

Sandrine Rousseau: Afterwards, we can talk about the birth rate, why the birth rate is falling in France, and in these cases, we must also address the question of the coming crisis, which we absolutely avoid in all debates in the National Assembly, which is this climate crisis which will be a factor of enormous uncertainty. I will give you an example so that you understand clearly. There is one thing, which is that for example in a situation of intense global warming, and we are moving towards temperatures of +2, +2.5 degrees, insurers say “We will no longer be able to insure”. Can you imagine the destabilization of our economic system that this represents, not being able to insure your property? That, for example in a capitalization system, has an effect, which is that we actually lose part of the capitalized value.

Caroline Roux: When you hear that demographically, it no longer holds, you say if we could politically make the choice to continue paying pensions despite this demographic imbalance compared to the model as it was designed?

Sandrine Rousseau: Of course. Today, we have a pension system deficit of 0.2% of GDP. 0.2%, that’s roughly 1.7 billion. 1.7 billion is the thickness of the line.

Gabriel Attal: You do not count civil servants’ pensions which are paid from the state budget, which is still a form of masking the reality of the pension system deficit. The State guarantees them, but how does it guarantee them? It guarantees them by taking money that we could put into education, into our infrastructure, into investment, into innovation to pay for pensions.

This text corresponds to part of the transcription of the debate above. Click on the video to watch it in full.