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Can Notional Accounts Save the French Payg System?

Author

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  • Xavier Chojnicki
  • Riccardo Magnani

Abstract

The French Pay-As-You-Go (PAYG) pensions system is faced with a major challenge: how can it absorb the demographic shock resulting from the retirement of the baby-boom generations and the increase in life expectancy? After several reforms reconfiguring the system, restructuring the current systems in favour of one based on notional accounts is now in debate. Using the CEPII's OLGAMAP model, we evaluate the effects in terms of pension financing, redistribution between generations and institutional transition. We show that, even if it makes the system easier to understand and to adapt to future demographic and economic fluctuations, the notional accounts system does not provide new solutions for the financing of pensions, being still based on the question of the choice between increasing contributions, reducing pensions and inciting the increase of the average retirement age.

Suggested Citation

  • Xavier Chojnicki & Riccardo Magnani, 2010. "Can Notional Accounts Save the French Payg System?," La Lettre du CEPII, CEPII research center, issue 297.
  • Handle: RePEc:cii:cepill:2010-297
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    Keywords

    PENSIONS; NOTIONAL ACCOUNTS; PAYG;

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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