Oecd working paper (2019) The mission of the French High Commission for Pension Reform is to prepare the reform introducing a universal pension points system in France. This paper explains why implementing a universal points system in France would increase transparency, reduce inequality and generate efficiency gains for the whole economy. It documents the experience of OECD countries which have opted for a points or a notional defined contribution (NDC) schemes, and provides a technical framework to compare defined benefit, points and NDC pension systems.
The paper discusses some key issues related to the main parameters of the new system. While it can include a wide range of redistribution schemes depending on political choices, indexation rules should be designed in a way that maximises, as much as possible, the rates of return on pension contributions within a pay-as-you-go system while ensuring financial sustainability and accounting for changes in life expectancy. This implies that the value of the point would vary at the individual level depending on the cohort and the effective age of retirement based on actuarial principles. No country having a points system currently uses age-cohort point values, and France could be the first one to introduce such an innovation.Â