Private Sector Complementary Pensions in France Frozen for One Year Amid Failed Negotiations

On October 17, 2023, the social partners managing the Agirc-Arrco complementary pension fund for private sector retirees in France failed to reach an agreement on the annual revaluation of retirement benefits. As a result, the pensions of approximately 14 million private sector retirees will be frozen from November 1, 2023, until October 31, 2026, marking a significant setback in the management of the pension system.

The negotiations, which began in the morning and ended in a tense atmosphere the same afternoon, saw employer organizations proposing a minimal increase of 0.2%, the lowest permissible under the pension scheme’s rules. However, this offer did not secure consensus, leading to the decision to freeze pension increases for the coming year. This freeze comes amid inflation projections of 1% in 2025 and 1.3% in 2026, which means retirees will suffer a notable loss of purchasing power during this period.

Prime Minister Sébastien Lecornu had recently called for social partners to assume a greater role in the pension distribution system, highlighting the importance of their cooperation. The failure to reach an agreement, however, underscores ongoing challenges in balancing pension financing with economic realities.

The Agirc-Arrco pension program is crucial for France’s private sector retirees, supplementing the primary state pension. The freeze represents an economic strain during a time when many retirees face increasing costs and financial uncertainty. With social partners unable to align on a path forward, around 14 million people will directly feel the consequences as the cost-of-living adjustment remains stalled.

This development is expected to renew discussions on the role of social partners and the future sustainability of France's complementary pension schemes, with attention focused on upcoming negotiations and government policy responses.