France’s government announced on Wednesday it would raise the retirement age and increase taxes for top earners in a long-awaited reform aimed at balancing the heavily indebted pensions system by 2018.
Under the plan, which is likely to meet trade union resistance, the minimum retirement age will be lifted gradually to 62 in 2018 from 60, and levies on capital gains, stock options and other investment income will all shift higher.
“There is no magic trick when it comes to pensions,” Labour Minister Eric Woerth told reporters, unveiling proposals drawn up after three months of consultations with sceptical unions.
“We cannot ignore the fact that the French population is aging. We have to confront this fact. Our European partners have done this by working longer. We cannot avoid joining this movement,” he said.
President Nicolas Sarkozy hopes the reform will convince investors he is serious about cleaning up state finances, which are set to register record deficit and debt levels in 2010, and enable France to cling to its prized AAA sovereign debt rating.