Pension Plans and Retirement: What Are the Real Advantages of RATP Workers?

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Parisian transport has been largely paralyzed since Thursday, December 5. To protest against Emmanuel Macron’s proposed pension reform, RATP unions have called for a renewable strike that will run parallel with the SNCF strike. The objective: to maintain the special pension system for RATP employees. Here’s an overview of what they’re actually fighting for.

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Who is affected by RATP’s special system?

The special pension system concerns only the RATP employees in Paris and larger region employed by its EPIC (an acronym for public establishment of an industrial and commercial nature). The other employees are on private-law employment contracts and do not benefit from the employment guarantee. The staff working for RATP’s subsidiaries that operate transport elsewhere in France or abroad do not benefit either.

The agents benefiting from the special pension system represent 90% of Epic’s staff, or 41,000 out of 45,000 people. Thus, within the RATP, there are two pension plans in place. “In the same job role, there may be people in the general pension system with the determined age of retirement from the general pension system and the methods of calculating the pension from the general pension system, and other people under the special pension status,” explains a source who knows the company well.

Together, the guarantee of employment and this special pension system make up the two original features of RATP “statut” (status), which can help explain the staff’s uneasiness. “It has a symbolic importance, it’s almost identity-based,” the source points out. Unlike the SNCF, work hours and payment are not part of the RATP statut. All these elements are negotiated by collective agreement, as in any other company. The announced abolition of the special regime is all the more troubling to the workers as it comes at a time when the company’s monopoly on public transport is expected to end, starting in 2025 for buses, 2029 for trams and 2039 for the RER and metro, which will force the company to adapt to be competitive.

At what age can RATP employees retire?

What does this special pension system include? First, early retirement for its beneficiaries. The age of “eligibility” depends on the staff category in the statut to which the person belongs.

— For bus, metro and RER drivers and those with very similar working conditions, the theoretical age of departure was 50 years old in 2017, an age that is gradually being raised at the rate of an additional four months per year until January 2022 when the age of retirement is 52 (it’s 50 years and 8 months in 2019).

— The “maintainers” (mechanics for the buses, metros, trams, signaling systems, etc.) can retire at 55 years of age, an age that will rise to 57 in 2022, using the same process of adding four months per year. Together, these two categories cover 31,000 people.

— Sedentary employees and members of the “support functions” (administrative and support) staff can retire at the age of 60. They will have to wait until 62 years in 2022, which will be in alignment with France’s general pension system.

But this does not mean that the employees actually retire at these ages of pension eligibility. Workers are subject to a reduction in pension if they retire too early, without having contributed enough years. In actuality, the average age of retirement is almost three years higher in each category. Employees must wait a certain number of years after the theoretical retirement age to leave without a reduction in their pension. Today, this period is three-and-a-half years and will gradually increase to five years by early 2022. Eventually, drivers, for example, will have to wait until 57 (52 plus five years) to retire without a reduction in pension payout and maintenance workers will have to wait until 62. (In 2019, RATP employees had to work just as many quarters as a private sector employee, i.e. 167 quarters, to receive a pension without reductions. However, the alignment is more theoretical because of the existence of the five year waiting period after the age of eligibility which allows people to retire without any deductions to their pension.)

However, the majority of employees do not retire with a full pension at full rate. This means that these employees believe that they have a sufficient enough pension to leave beforehand despite the reduction.

With the reform proposed in July by Haut-commissaire aux Retraites (high commissioner of pensions) Jean-Paul Delevoye, the age of retirement eligibility would be raised by four months per year, starting with those born in 1968 or later, for people who retire at a 57. Ultimately, the effective retirement age for a no-reduction retirement would be increased to the age of 64.

How is pension calculated?

The method of calculating the pension for RATP workers is also interesting. The pension of staff under the “statut” is based on one’s salary during the last six months in the civil service, unlike a pension in the private sector which is based on the best 25 years of one’s salary. The transition to calculating pension over the entire career period is therefore likely to reduce the pension of staff, especially since they benefit from higher-income careers. “What worries employees today is the impact of the reform project on their pension level,” underlines our source, who is familiar with the social climate in the company.

How much does this special pension system cost the population? Each year, pensions paid amount to about €1.2 billion. On the other hand, contributions from employees and employers reach €500 million, meeting the same level of contributing effort as the private sector. There’s a €700 million hole left, but of this amount, 350 million euros can be explained by the company’s demographic structure. The net cost for the population of the special RATP system’s exemption conditions, paid for by the State budget, therefore amounts to €350 million.

It’s a burden that the company would not be able to assume on its own, because it only produces between 200 and 240 million operating profit per year, according to a close source. One of the challenges of the reform process is therefore to find out whether or not the State will continue to assume its budget-balancing subsidy for a transitional period, while the demographic compensation is assumed by the pension system.

How much does a former RATP agent earn when he retires?

The Court of Auditors had mentioned the figure of €3,705 for new retirees in 2017, but this figure is disputed. It corresponds to the average gross amount that a RATP employee who retired in 2017 can earn after a full career without any deduction (this number includes all categories of staff). The alternative figure is 2,856 euros — proof that staff prefer to retire early and accept the reduction. As for the average pension of all RATP pensioners, including those who retired a long time ago, it amounts to 2,357 euros, all categories of staff combined. The replacement rate, or the amount a retiree can expect to receive monthly, is around 74% of their salary during their last 6 months.

To better justify the strike, the RATP unions advertised the reduction in pension that a worker could expect after a lifelong career using the proposed universal pension system. According to the calculations of several of the unions, the reform would automatically lead to a reduction in pensions, of around 500 euros per month for a mechanic, for example. But most agents already employed by the RATP when the new system comes into force will be entitled to a full carryover of their pension plan acquired under the old system at that time. It’s therefore difficult to estimate the impact on their pensions, since the exact terms of this changeover, in particular, have not yet been defined. Nonetheless, it’s difficult to reassure workers in this time of change.

This article was first published on Le Point.

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