Agirc-Arrco: the private supplementary pension scheme with a deficit of 4.8 billion euros



A historical deficit, “Commensurate with the economic and social situation we are going through”, recognizes Agirc-Arrco, the supplementary pension for private sector employees, which announced Tuesday afternoon March 16 a negative result of 4.8 billion euros in 2020.

While the previous financial year had ended with a positive result of 1 billion euros, the crisis will therefore have hit hard the private supplementary pension system.

→ EXPLANATION. For Social Security, a historic deficit but less than feared

In terms of resources first, contributions have experienced a historic decline: – 4.7%, to 79.4 billion euros. The sole maintenance of the rights of 8.8 million employees in partial activity – who do not contribute during their period of partial unemployment – cost 4 billion euros, while the 52,000 payment delays and 25,000 contribution deferrals granted to businesses cost 400 million euros.

61 billion euros in reserves

For their part, spending continued to grow: + 2.8%, to 85.4 billion euros, including 82.8 billion in allocations to which were added in particular 100 million euros in exceptional aid to 100 000 retirees among the most in difficulty.

Fortunately for Agirc-Arrco, the “technical” deficit of 6 billion euros is offset by the good financial results, due in particular to more than 61 billion in financial reserves which have grown and brought in 1.2 billion. This explains the deficit contained at 4.8 billion euros.

To meet its needs, and in particular to cope with a refusal by the State of an exceptional aid of 8 billion requested in June, the supplementary pension scheme for employees nevertheless had to draw on these reserves, which fell by 3, 9 billion euros. They nevertheless still constitute the equivalent of 9 months of benefits, above the 6-month bar that the social partners set as the limit in 2019.

“There will undoubtedly be measures to be taken”

To face the crisis, Agirc-Arrco had nevertheless taken measures, deciding in particular, last autumn, to freeze the service value of the point, which serves as the basis for calculating pensions.

→ READ. The Covid and the crisis freeze supplementary private pensions

For this year, no decision has yet been taken. President of Agirc-Arrco, Didier Weckner underlines that part of the causes of this year’s deficit “Should be reabsorbed in fact with the improvement of the economic situation”.

“But we cannot exclude that the economy will not immediately regain all its dynamism”, he admits, explaining that he has “Alerted” lhe social partners, plan administrators, on the risk of seeing the reserves drop below the 9-month benefit mark. “There will undoubtedly be measures to be taken”, he insists.

Point value: no decision until fall

“To date, nothing has been decided”, nevertheless relativizes Brigitte Pisa, vice-president of Agirc-Arrco, dismissing any decision “In the fall, when we will have a little more perspective”.

In the meantime, the private supplementary pension plan intends to continue its policy of reducing operating costs, from 1.9 billion in 2012 to 1.3 billion in 2020, hoping to save another 100 million by 2022.

→ EXPLANATION. The pension system towards a record deficit in 2020

It is counting in particular on the development of computerization, whereas 50% of requests are now made online (20% of reversion requests). In 2020, online services even increased by 10% and this allowed the liquidation of 660,000 pensions, a number roughly equal to 2019, despite an exceptional temporary drop during confinement.

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