“French pensioners are sitting on an invisible treasure: latent real estate capital gains”

AT every five years, for more than twenty years, the same debate on pension reform has seen the same arguments brandished, the same scarecrows, the same obsessions. The issue of pension funding is generally confined to the sole technical methods of levying assets, with two points of tension: the retirement age and the contribution period to benefit from a full-rate pension.

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However, the issue of pensions is not limited to the modalities of the current distribution system. It is above all a financial question, a balancing act whose purpose is to guarantee retirees a correct level of pension, which goes beyond our sacrosanct pay-as-you-go system.

Flows between generations, through which today’s workers finance the pensions of yesterday’s workers, are no longer sufficient. Therefore, if we do not want to crush assets under the weight of contributions, we must supplement the current system, which dates from a time of strong economic and demographic growth, with innovative financial mechanisms.

One of the avenues explored here is the monetization of real estate owned by retirees.

A growing imbalance

The ability of the current system to cover the needs of retirees depends mainly, on the “contributions” side, on the number of contributors and the rate of contributions, and on the “pensions” side, on the duration during which retirees receive their pension and the amount of pensions .

Today, the system is facing a growing imbalance between the number of working people and the number of retirees, combined with the increase in life expectancy which lengthens the duration of pension payment. If nothing is done, with an unchanged level of contributions and retirement conditions, the standard of living of retirees will have to decrease in the decades to come, by 10% to 15% by 2050 according to the scenarios of the Pensions Orientation Council (COR).

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The problem is that the leeway is slim, if not non-existent. On the “contributions” side, the number of contributors depends above all on the unemployment rate, which no government has yet succeeded in reducing structurally below 7%. The rate of contributions can hardly be increased, given the already high level of compulsory levies.

On the “pensions” side, the drop in the level of payments is ruled out. The only solution therefore remains is the postponement of the retirement age… which 67% of French people are opposed to (Odoxa poll for LCP and Public Sénat, December 2022). So what to do?

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