Returns of the French pension system in the private sector: intergenerational and intragenerational perspectives

In this study, we consider two goals of the French pension system: equity and solidarity. We choose two indicators that allow us to measure to what extent these objectives are met - the internal rate of return and the recovery rate - and compute them by microsimulation with Destinie 2, for the private sector, with two different approaches. First, in an intergenerational perspective, we consider these objectives between generations. We study their evolutions from the generation born in 1950 to the generation born in 1985 and underline the effect of each of the three driving forces behind those evolutions: the funding of the pension system, that is more and more diversified, the economic growth that induces different effects according to those indicators and, finally, the duration of the retirement, and how it has been modified by reforms. Second, in an intragenerational perspective, we compare the returns for different categories of people in the same generation. Some differences are indirectly due to the pension system, such as life expectation. They explain a large part of the differences of returns between men and women. On the opposite, despite the fact that they live less longer than others, unskilled people have a higher return. Other differences can be directly due to the pension system. For example, bonuses for children and survivors pension have very important redistributive effects toward married couples and people with children.