The OECD has urged France to resume its suspended 2023 pension reform from 2028 and eventually link the statutory retirement age to life expectancy, warning that further measures are needed to ensure the long-term sustainability of the country's pension system.

In its latest Economic Survey of France, the OECD said the implementation of the 2023 reform should continue as originally planned, raising the statutory retirement age from 62 to 64 by 2033.

However, it argued that France should go further by linking key pension parameters, including the retirement age, to demographic developments.

"Ageing is set to increase spending pressures further," the OECD said, adding that linking the retirement age to life expectancy would help boost employment, reduce pension expenditure and increase government revenues.

The report noted that France spends more on public services than any other euro area country, with public expenditure reaching 57.2 per cent of GDP in 2025. Pension spending remains one of the largest contributors to this, accounting for much of the country's higher social protection costs.

The OECD warned that demographic trends will place increasing pressure on the pension system over the coming decades.

France's old-age dependency ratio is projected to rise from 38 per cent in 2022 to 53 per cent by 2050 and 58 per cent by 2070, meaning there will be just 1.9 workers for every person aged over 65 by 2050, compared with 2.5 workers in 2024.

While the 2023 reform would broadly stabilise pension spending at around 14.2 per cent of GDP by 2045, the OECD said it would not eliminate funding shortfalls.

Citing projections from the French Pensions Advisory Council (COR), it noted that the pension system's financing needs are expected to increase from around 0.1 per cent of GDP in 2024 to 0.2 per cent in 2030, 0.4 per cent in 2040 and 1.1 per cent by 2070.

The organisation therefore recommended that France resume the 2023 reforms as planned before considering further increases to the retirement age in line with gains in life expectancy.

It noted that nine OECD countries already link retirement ages, either fully or partially, to life expectancy, and said similar reforms in France could reduce public pension expenditure by around one percentage point of GDP by 2070 compared with maintaining the current system.

Alongside pension reforms, the OECD stressed the importance of improving employment among older workers. It said raising employment rates to levels seen in Germany, particularly among older people, could reduce social protection spending by around €5bn while increasing government revenues by €15bn.

The report also called for a fairer sharing of the costs of population ageing between generations.

It argued that retirees currently benefit from relatively favourable tax treatment and recommended aligning social tax rates for pensioners with those paid by workers, as well as phasing out the 10 per cent income tax allowance for pension income.

According to the OECD, removing the tax allowance would increase fairness between generations while generating around €4.5bn in additional annual revenue.

It also suggested that temporary and targeted limits on pension indexation, while protecting lower-income pensioners, could help strengthen France's public finances.

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