French pension system must return to balance by 2030, PM says

Pension negotiations between French unions and employers must chart a path for steering the retirement system's finances back to balance by the end of the decade, Prime Minister Francois Bayrou said on Thursday.

Unions and employers federations began talks on Thursday to modify a deeply unpopular 2023 pension overhaul that gradually raises the retirement age two years to 64.

"Negotiators' objective should be to bring the retirement system's finances back to balance in the near future while proposing real improvements for citizens," Bayrou said in a letter to participants seen by Reuters.

"I would like to set a target of 2030," he added.

To set the stage for the talks, the independent audit office said last week that France could ill afford to scrap the 2023 reform, which it estimated would cost 13 billion euros ($13.6 billion).

Even with the 2023 reform, the shortfall between pension contributions from workers and employers and payouts to retirees would reach 15 billion euros by 2035 if nothing more is done to reduce it, the audit office said.

Unions want to scrap the increase in the retirement age while business federations want to avoid additional payroll contributions that would increase the cost of labour.

Bayrou, a long-time debt hawk, has said all options are on the negotiating table between unions and employers, including the retirement age, as long as any changes do not leave the pension system deeper in the red.