Falling births to hit France's pension deficit from 2045

PARIS, June 11 (Reuters) - France's ‌retirement system is ​set ​to run larger-than-expected deficits from 2045 when the falling birth rate starts weighing on the system's finances, the pensions ‌advisory council said on Thursday.

• The council's annual update said ⁠the outlook was largely unchanged from last year until 2045, but a recent ‌downward revision to the fertility ‌rate worsened the picture after that.

• As a result, the gap between contributions and payouts is now expected to reach 2.4% of ​GDP by 2070, a full percentage point higher than estimated a year ago.

• The update was based on fresh long-term population estimates ⁠from the national statistics agency, which expects the fertility rate to fall to 1.45 children ​per woman from 1.8 previously.

• The deteriorating outlook is bad news for France's public finances, which last year included ​422 billion euros ($486 billion) in pension ‌spending, or 14.1% of economic output, the second highest share among advanced economies after Italy.

• The council said ⁠raising the retirement age is the only non-recessionary fix as every other lever, such as cutting pensions or hiking contributions, weighs on growth. Only working longer ⁠actually grows the economy.

• Higher immigration could help short-term finances, but migrants eventually ​retire too, merely delaying the financial reckoning by a decade.

• The report is likely to fuel debate about pension reform, which is set to be one of ‌the major political battlefields heading into the April 2027 presidential election.

• To ease opposition to its 2026 ‌budget, Prime Minister Sebastien Lecornu's government agreed last year to suspend a ⁠deeply contested 2023 pension reform ‌that gradually raises the ​legal retirement from 62 years - among the lowest for advanced economies - to 64.

($1 = 0.8679 euros)

(Reporting by Leigh Thomas;Editing by ‌Elaine Hardcastle)

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