France Suspends Pension Reforms, Introduces New Social Security Measures for 2026

France has temporarily halted its controversial 2023 pension reforms and introduced a series of changes to its social security system, as outlined in the 2026 Social Security Financing Law (LFSS). The reforms, which initially raised the retirement age from 62 to 64, will be suspended through 2027, effectively delaying the full implementation of the higher retirement age to those born in 1969 or later.

Pension Reform Suspension

The 2023 pension reform law, enacted in April 2023, sparked significant protests and debate. The law required a minimum of 43 years of work to retire at 64. The LFSS suspends the gradual increases in the minimum retirement age and insured employment period established by the 2023 reforms through 2027. This means the minimum retirement age of 64 will now apply to those born in 1969 or later, for pensions claimed on or after September 1, 2026.

New Social Security Benefits and Changes

Alongside the pension reform suspension, the LFSS introduces several new benefits and adjustments:

• Additional Birth Leave: A state-paid “birth leave” (congé de naissance) of up to two months will be available from July 1, 2026, for children born or adopted on or after January 1, 2026. This leave is in addition to existing maternity, paternity, or adoption leave and must be used within nine months of the child’s birth or adoption.
• Pension Increases Adjusted: To address social security funding concerns, pension increases will be reduced during 2027-2030.
• Supplemental Healthcare Tax: Insurers will be subject to a 2.05% tax on premiums for supplemental healthcare policies in 2026.
• Improved Benefits for Mothers: The calculation of social security retirement pensions will be amended to improve benefits for women who have raised one or more children.

Changes to Pension Fund Investment

The LFSS also modifies the management of second and third pillar pension savings. From 2027, these savings will be invested with varying levels of risk based on the age of the individual:

• Dynamic Sub-Fund: For individuals up to age 50, investments will be allocated to a dynamic sub-fund with higher risk.
• Balanced Sub-Fund: From age 50 to three years before retirement, investments will shift to a balanced sub-fund with moderate risk.
• Conservative Sub-Fund: Within three years of retirement, investments will move to a conservative sub-fund with lower risk.

Individuals will have the option to change their sub-fund allocation annually, but will be automatically switched to a conservative fund within three years of retirement. The current mechanism for guaranteeing a minimum yield will be replaced with a market indicator (benchmark) for profitability, whereas still guaranteeing the gross value of contributions.

Infrastructure Investment

The law allows for pension funds to invest up to 10% of savings in Bulgarian infrastructure projects, a move intended to support national development. Investments will be made through the stock market, with oversight from institutions like the European Bank for Reconstruction and Development and the European Investment Bank.

Strengthened Control and Oversight

The LFSS also strengthens control over private pension funds by introducing additional capital requirements and a national accounting standard specifically for pension funds. Requirements for the management and control bodies of pension insurance companies have also been increased.

These changes aim to ensure peaceful and well-deserved retirements for all working and insured persons, according to the Financial Supervision Commission.