INTRODUCTION Retirement is now one of the main stages of life. It is also our first device of solidarity.

This solidarity, our retirement system division makes it live. We b uilt it step by step from the Second World War. It is the fruit of our culture, our values. There is a link that unites the generations together. But this syste m is now threatened as a result of aging. The French are more likely to retire: France will have 18 million retirees in 2030 against 15.5 million today and $ 23 million in 2050. We also live more and longer, with life expectancy has increas ed 15 years since 1950. Faced with this aging, the number of assets is becoming increasingly inadequate. They were 4 for a 1 retired in 1960, 1.7 today and 1.5 in 2020. In its report of April 14, the Board of Retirement Guidance (NRC), an i ndependent body, including that combines the social partners as well as parliame ntarians from the majority and the opposition, made a final statement of the con sequences of this demographic challenge. If we do nothing, our pension plans wil l face high deficits hardly conceivable. And the unprecedented economic crisis t hat we have just experienced a rapid increase in these deficits. In 2007, the pr ojected deficit for 2030 was 1.6 percentage points of national wealth (GDP) is n ow the situation that we know in 2010. If we do nothing, it will further deterio rate sharply to 70 billion euros per year from 2030 to 100 billion euros in 2050 . Do not react to such levels of deficit would be inconsistent with the place th at our people give to our retirement system. But it is also incompatible with th e idea of solidarity between generations based distribution. How pourrionsnous p retend that we are committed to this system if we privions future generations or if we did it based on all the effort? Of course, it is quite possible to imagin e that our children would still have a retirement system, but say the truth, not ours. Not who allowed us to divide by nearly 4 poverty of the elderly since the Second World War. Not who allowed us to ensure a standard of living equivalent to retirees and active, which is a major change. Not that that validates pension rights when you are unemployed, when ill or when you stopped working to raise h er children. It is this system that we have to defend. It is the latter, and not another, which must inherit our children. That is why we must look at reality. This is why we must act. It is the choice of President of the Republic and the G overnment. The reforms implemented in 1993, 2003 and 2007-2008 have already help ed to accomplish a significant part of the road. We must now continue. The pensi on reform that we must build today can not be reduced to a reform of parameters: it is a reform of society. 2 A society in which selfishness between generations has no place. A society in wh ich the French regain confidence in their retirement system. A society in which the effort is distributed equitably. A society in which age is redesigned for th e elderly regain their place in the world of work. The Government shall, in this context, two goals in the pension reform. First objective: to provide a sustain able response to the financial difficulties of our pension plans, by acting on t heir structural causes. Second objective: to consolidate the French system in it s most profound solidarity. Solidarity between generations, of course, and also solidarity among individuals, to take into account the constraints and vagaries of life. These objectives, the Government wishes to achieve in respect of severa l commitments that this guidance is intended to explain. He fed the first stage of consultation that the Minister of Labour, Solidarity and Civil Service conduc ted with political parties, social partners and trade unions of public service. 3 I - RESTORING CONFIDENCE IN THE FRENCH SYSTEM OF RETIREMENT Commitment # 1: save the PAYG system. The French pension system is based on the distribution.€Cap devices exist, but in a complementary manner, to enable active wishing to save individually or as part of their business for their retirement.

The Government does not want to move to a system based on capitalization, for s everal reasons. On the one hand, France has built its pension system around the idea of intergenerational solidarity, that is to say around the idea that it is right that the active fund the retirement of their elders. The capitalization, b asing the pension on an individual choice, in this regard would be an important change of principle. On the other hand, tipping in a funded scheme would not pro vide a response to current problems of pension schemes. It could not be immediat ely and totally, except imagine that today's working generation pays twice for h is retirement and that of the generation that preceded it. He would not provide any further response to the demographic imbalance PAYG is to say, the financing of pensions of current retirees. Finally, funded schemes are sensitive to fluctu ations in financial markets, which is inconsistent with the protective and secur ity to be represented retirement. The Government intends to continue to make the distribution pillar of French pension system. It will propose measures to ensur e that more French to supplement their pensions through the use of pension savin gs devices, but without calling into question the current balance between distri bution and accumulation. Commitment # 2: ensure the return to equilibrium of our pension plans in the medium term. The pension issue is now one of the main conc erns of our citizens. Younger worried they will no longer benefit from a system based on solidarity between generations, or fear having to bear alone the weight of his balance, while the older fear that their pensions could be financed unde r the influence accumulated deficits. To restore confidence in the future of our pension plans, it will not reduce their deficit. It will actually ensure that t hey return the balance. To this end, the reform will aim to define the rules for schemes until 2020 or 2030. The government does not rule for long-term track sy stemic reform of the calculation of duties (by points schemes or notional accoun ts, always in the context of the distribution). Such reform could help to make t he system more transparent and comprehensible for the insured. However, it would not in itself a response to financial imbalances regimes, as shown by the repor t of the Board of Retirement Guidance published in January 2010. Basing the retu rn to equilibrium of pension plans on changing the mode of calculation of fees, without affecting the duration of working life, would result in lower pensions a s the Government refuses. 4 Commitment # 3: Do not cut deficits by reducing the pensions of retirees today. Some countries have in recent years, reducing the living standards of retirees t o reduce deficits in their pension plans. This is for instance the case of count ries like Germany or Sweden, have linked the development of pensions and the fin ancial or demographic balance pension plans. The President of the Republic, for its part, rejected this idea from the start of the appointment in 2010. The Gove rnment denies that the 15.5 million retirees have the amount of their pensions d ecline. Such a decision would be the opposite of the principle of trust that mus t base our pension plan. This means in practice that not only the pensions will not fall in euro, but also that their purchasing power will always be guaranteed , as is the case today, thanks to the annual adjustment of pensions based on inf lation. This assurance of protection of purchasing power against the price incre ase is, again, a key determinant of trust in our retirement system. Commitment # 4: Do not cut deficits by reducing the pensions of retirees of tomorrow. INSEE showed that taking into account all elements of income, the purchasing power of retirees remained at par with those assets. This finding is the same as that alr eady established by the White Paper on pensions in 1991.€The report of the Board of Retirement Guidance issued on April 14 also indicates that the average level of pensions will continue to grow by 20% above inflation by 2030. This improvem ent results from the pension guarantee purchasing power given to pensioners by l aw as well as the improvement of future retirement pensions as a result of wage adjustments. The Government intends to maintain this improved level of pensions. Restoring and maintaining confidence in the PAYG system presuppose that the lev el of pensions is guaranteed and is improving. Commitment # 5: Improve the under

standing and information of the French on their future pensions. Able to anticip ate the amount of its future pension is a crucial element of trust in the pensio n system, partly because it helps to make choices during his career, could have a positive effect on his retirement. The social partners have all stressed this point. The rules for retirement, however, are numerous, especially because the F rench system offers protection against a wide variety of situations (unemploymen t, sickness, maternity, part time etc..). For historical reasons, France also ha s a retirement system divided into 35 compulsory schemes. Some are basic schemes , other supplemental plans, others provide two floors. In most cases, the French are "poly-pensioners, that is to say within several regimes. On average, they 5 2.3 collect pensions. Although much of the rules of these 35 schemes are now com mon, this fragmentation increases the sense of complexity. Considerable progress has been made for information on pension entitlements by the 2003 Act. The Gove rnment agrees that the right device to the insured individual retirement informa tion set up in 2003 to be strengthened. It will propose the creation of a "route point retirement at age 45, allowing policyholders to have a review of their pe nsion rights and advice on all the instruments at their disposal to improve thei r future pension. The Government also propose changes to simplify the situation polypensionnés. ** II - MEET THE REAL CAUSE OF IMBALANCE OF OUR PENSIONS: THE DEMOGRAPHY As we have seen, the imbalance of our pension plans do not result from the crisi s. Its causes are old and demographics. The crisis has only accelerated effects without cause. By symmetry, the return of growth and full employment, even if th ey should naturally be encouraged, not enough to give a future to our retirement plans. Projections of the NRC published April 14, 2010 are in fact based on ass umptions of unemployment well below the current rate of unemployment: with an un employment rate of 4.5%, which corresponds to full employment, the deficit for e ach year, between 41 and 45 billion in 2020, and between 56 and 70 billion i n 2030. With an unemployment rate of 7%, it would amount to 49 billion in 2020 and 80 billion in 2030. It is therefore pointless to argue based conservation schemes by distributing only the return of growth and full employment, since th is perspective is already incorporated by the NRC in its projections. If a retur n to full employment is not enough to save our pensions, do not do this will agg ravate the situation in hand. That is why the Government reaffirms its oppositio n to any solution that would penalize growth and employment or begin living stan dards of the French. Commitment # 6: discard any solution that would decrease th e level of French life or increase unemployment. Any solution based on the gener al increase in the tax burden would necessarily be inconsistent with this princi ple. Finance the pension deficit, mainly through increasing the tax burden would indeed cumbersome to 32 billion in 2010 and at least 41 billion in 2020 and 70 billion in 2030 the weight of these samples , which are already in France to one of the highest rates in the world. Thus the report of the Council of comp ulsory levies, published in October 2009, said that the tax burden in France amo unted to 44.2% in 2006 against 39.8% in the EU15 (EU15 ). The rate of levies on businesses only amounted to about 17.2% of its GDP in 2006 ( 311.8 billion)€5.7 points above the EU15 average. 6 The prospect of a new general increase in these samples could therefore be deepl y damaging to employment and growth. i) It is for this reason to exclude a gener alized increase in social contributions. The increase in labor costs resulting f rom a generalized increase in payroll taxes would be particularly detrimental to employment. We can estimate that a point of employers' social contribution woul d represent at least a destruction of 50,000 emplois1. But the shortfall in this way would require an increase of 3.8 points and pension contributions only to f

inance the deficit in 2010, is a destruction of nearly 200,000 jobs. The widespr ead increase in employees' social security contributions would significantly red uce the purchasing power of workers: an increase of almost 4 percentage points o f payroll taxes would represent wage for an employee earning the average wage Fr ench (2661 euros gross), a puncture its standard of living of 1272 euros per yea r from 2010. Such a reduced standard of living of households affects the growth and employment through its impact on consumption. ii) Moreover, the replacement of the revenue base of work by an assessment on the value added penalize investm ent and competitiveness, especially in manufacturing. Some political parties hav e proposed this track as part of the consultation. The Government considers that it is not a solution to the imbalance of our pension plans. Several governments , left and right have in effect made to study this idea by recognized experts: r eport of Edmond Malinvaud (1998, awarded to Lionel Jospin) or report of the Advi sory Board for the Job (2006 given to Dominique de Villepin). These reports emph asized the negative effects of such a solution on investment and business compet itiveness, and recalled that it would not increase revenue in return for welfare because of the stability of the distribution of value added. In addition, they showed that this funding would penalize the industry compared to the services se ctor, which would defeat the purpose, widely shared development of French indust ry. iii) However, the Government does not, in a sense of fairness, require any n ew levies on plates and revenue targets. These samples should help ensure a fair sharing of effort and funding mechanisms for solidarity from our pension funds, without undermining the purchasing power of households and with the competitive ness of our economy (see below). Commitment # 7: responding to a demographic imb alance in demographic solutions. According to the ROC, the ratio between contrib utors and pensioners now stands at less than 1.7 active retiree. He was 4 for an active retired in 1960. It will continuously deteriorate in the future to 1.5 i n 2020 to 1.2 in 2050. The first stage of the consultation conducted by the Gove rnment on this point, revealed an overall agreement of political parties and 1 Centre for the Study of Employment (August 2009). 7 social partners on the importance of the demographic shock in the imbalance of p ension plans. Given this demographic imbalance, the Government, we have seen, re jects two tracks incompatible with the principle of a fair reform: the decline o f pensions, which would break the pact of confidence which bases retirement pay, the general increase in the tax burden, because it would undermine the competit iveness, employment and living standards of the French. Responding to demographic imbalance pension means that the Government will play on the levers to increase the number of contributors by the number of retirees. This involves increasing the duration of activity, that is to say, the time spen t at work versus time spent in retirement. Only this solution population can res pond to the root cause of fiscal imbalance while being compatible with the goal of justice that the Government has set in the context of the reform: increased d uration of activity does not penalize growth or employment, nor the level of Fre nch life. In contrast, long-term growth of the workforce is one of the main driv ers of wealth creation, it draws the consequences of increased life expectancy,€ which increased by 15 years in 60 years and continues to increase by one quarter per year. That is why the Government will increase the duration of activity, underpinning a fair and sustainable response to the imbalance of pension ¸ does not preclude further action. This increased duration of activity can be obtained by acting on

several levers. i) First lever: increasing the contribution period to qualify f or a full pension. This is the path chosen by the 1993 reform, which resulted in the passage from 37.5 to 40 years of contribution period in the private sector, then by 2003, with the passage of 40 years the public and the definition of a p ermanent rule of sharing of gains in life expectancy between the duration of ret irement and length of working life. Lengthening the contribution period has resu lted in the French work longer. Thus in the Civil Service, the actual age of ret irement from 57 years and eight months in 2005 to 59 in 2009. The generations th at are now reaching retirement age have in most cases a full career. This is bec ause the average age of entry stood for these generations to a level substantial ly lower than today: the average duration of insurance validated 30 years has dr opped by 11 quarters ( passage 42-31 quarters) between the 1950 cohort and gener ation in 1974. As and when the average age of entry will rise, this lever will i ncreasingly reduce the deficit financing of pension plans. 8 ii) Second lever: the increasing age of entitlement to retirement. Currently, th e age of entitlement to retirement is 60 years, with some exceptions (see below) . Increasing age is likely to have a faster impact on the workforce longer worki ng lives that the contribution period. Compared to the increase in the contribut ion period, the lever does not otherwise penalize those who come later on the la bor market. Increasing the contribution period only puts them at risk of not hav ing all their quarters at the age of 60, and therefore focuses on this part of t he assets the choice between a reduced retirement (applying the discount) or a d eparture from retirement after 60 years. Who are these assets? Those who are stu dying, of course, but also young people who face greater difficulties in getting into the labor market and obtaining employment. Delaying the age of retirement, however, is likely to penalize the unemployed older, if this would keep them lo nger in unemployment, especially without benefits, that is to say with a level o f resources than their pension. The decline in the age of retirement, could not be considered without a specific on this point. iii) Third lever: the strengthen ing of incentives to liquidate his pension positioned beyond the age of 60 years . A possible system, known as the "pivotal age" is to apply, in addition to the discount related to the number of missing quarters, an additional discount (the "age") for the person that liquidates his pension before a given age, over 60 ye ars. The insured retains the right to claim her pension at age 60, but it would be greatly reduced, regardless of insurance period, compared to the insured that differs wound positioned beyond 60 years. The advantage of this system lies in the discretion afforded to the insured can still wind up their pension at age 60 if they agree that it is not only reduced by a discount under the number of mis sing quarters, but also to a "super discount" under retiring at 60. The Governme nt rejects this solution. First, because the system would be more complex, while the predominantly French expect it simpler to understand (see above). Secondly and most importantly because this solution would be totally inconsistent with ou r commitment not to lower pensions. The freedom given to persons to choose their age of retirement would have a high price because their pension would be signif icantly reduced during all their years spent in retirement. Some political parti es have argued the need to leave that choice to the insured, whereas it is to th em that the decision to arbitrate their future standard of living,€taking into a ccount their aspirations and all of their resources (property, etc.). The Govern ment does not share this view. The pension system is primarily a device for prot ecting people. This protection is based on mandatory pension contributions, so t hat the pension is based solely on savings, the level of which varies according to income and consumption patterns. It must also be expressed at the time of ret irement: an election in 60 years should not be missed throughout retirement. The current discount arrangements and oversubscription respect the balance between the imperative of protection and the need to maintain margins of freedom. Going further would upset this balance.

9 Commitment # 8: Change the rules are very gradual. All pension reforms undertake n so far have respected this principle of progressivity. The reform of 2010 also respect. It is indeed a prerequisite for maintaining the confidence of policyho lders in the pension system. The increased duration of activity and will progres sively as the generations, as determined by their year of birth, will reach reti rement age. Each generation will and conditions of retirement fixed once and for all, whatever its actual date of departure. This escalation is strong protectio n, because it prevents people from going to retire soon see their life project b rutally disrupted by the rules change. In addition, policyholders aged 60 and ol der who are retired or who have chosen to extend their activities beyond the leg al retirement age, will not be affected by the rule changes. Commitment # 9: Con sider those who have had a harder life. The requirement of justice implies that extending the duration of active life takes into account two types of situations : those assets that began their careers earlier than others, and asset facing a particular hardship in their professional lives . This requirement is, in princi ple, subject to a very broad consensus among political parties and social partne rs. To answer the first situation, the 2003 law created the device long careers. It is to allow employees with an insurance period significantly greater than th at required to receive a full pension to retire earlier than others. The Governm ent propose to extend this device "long career" and will explore with the social partners the necessary adjustments, given the longer duration of activity. It s hould also take account of the harshness inherent in some careers. The effort to assets in extending their working life can not ignore the burnout that some of them are facing. Despite its unsuccessful outcome, the inter national negotiatio ns on the hardship has made progress in defining factors of difficulty. The Gove rnment follows this approach, based on personal monitoring of workers' careers a nd not on the a priori definition of occupational categories. The hardship is no t a simple subject, all social partners and political parties consulted by the G overnment recognize. But the consensus is very broad to consider that one can st ill move forward. In the wake of the speech of the President of the Republic to Congress June 22, 2009, which clearly stated that the hardship would be addresse d as part of "Rendez-vous 2010, the Government confirms its intention to integra te this component in the reform . He will propose to the sides of rules specific to: recognize the difficulty of assets, following the exercise of a sustainable business by exposing them to a recognized physical hardship, are facing situati ons of physical wear professional, 10 significantly improve the prevention of such exposures, including their traceabi lity and encouraging employers to reduce the exposure of assets to hard labor. C ommitment No. 10: Stopping the French specificity in employment of older workers . Analyze the situation of France in employment of older workers is more complex t han it seems.€Our country is indeed among the first in Europe for the employment rate up to 55 years. From that age, and up to 59 years, we are located just wit hin the European average. From 59 years, the employment rate drops very sharply and the gap is 15 points with the European average. This drop is related to the fact that the legal age of retirement is 60 years. France suffers therefore an e mployment rate of workers aged 55-64 years is far too low (37.9%), down 9 points from the average of the EU15, but with a strong caesura 59 years. This early ex it from the labor market of older workers is becoming more paradoxical gradually with increasing life expectancy. It led to this situation which is particularly disadvantageous that the same individual is both old and young in his business to retire. In doing so, France is deprived of a vital economic asset, business e xperience, and transmission of knowledge, and society as a whole gives the impre ssion of having a vision, harmful age. In this regard, the first stage of the co

nsultation showed a high degree of consensus on the need to increase the employm ent rate of older workers. To improve our performance in this regard, the Govern ment believes that two levers must be operated simultaneously. On the one hand, the duration of activity. Indeed, the Government believes that the settings of p ension schemes are a deciding factor in improving the employment rate of older w orkers. The prospect of retirement now leading many companies and employees to r elay to second place the training from 55 years or 50 years, and often leads to an early exit from the labor market based on arrangements, public or private car e of seniors. The increased duration of activity, through the qualifying period the increase in the retirement age, will necessarily improve the employment rate of older workers. The positive effect of increasing the contribution period has been noted in recent years, with an improvement of 0.7 point in 2009 the employ ment rate of 55-64 years. The arrangements adopted in 2008 (increased premium, c ombining work with pension reform of the retirement of office, requiring compani es with more than 50 employees to be covered by an agreement or plan of action f or seniors) have also contributed significantly. Second lever, the human resourc es policy and working conditions in enterprises. All human resources professiona ls and health at work viewed in the context of the first stage of consultation s tressed the need to implement radical changes for organizations, work processes and workspaces are better the effect of age specific issues arise as well from a certain age on working conditions, such as adaptation of workplaces. Specific p rovisions for senior citizens will therefore be integrated within the 11 "Health plan at work # 2", which the Government propose for the period 20102014; career development must be rethought in business but also in the public service . The management of recent years of a career must be anticipated, providing oppo rtunities for career transition age appropriate, but also the desire to see the contents of his job change. By extending the work of older employees, the action on the duration of activity will lead the HR managers of public and private sec tors to increase the concrete actions on all these subjects. The need, in additi on, legal tools to facilitate response, however, is a question submitted to the consultation, for example the development of tutoring. International comparisons show that the collective mobilization of various stake holders in improving working conditions and adjusting the position of senior cit izens can lead to a sharp increase in the employment rate of senior citizens: it has known example an increase of 17 points in Germany between 2002 and 2009 and 19 points in Finland between 1998 and 2009. ** III - STRENGTHENING THE FAIRNESS AND SOLIDARITY OF OUR PENSIONS The French system is based both on the distribution and solidarity. Mechanisms a llow for the vagaries of life (unemployment, struck term, insecure etc..) But al so the need to interrupt her career for illness or maternity. These devices must be preserved. The Government wishes, in this context, include in the scope of t he reform question of adapting some of them, to take account of changing social needs and to address situations of inequity proven. Moreover, if the Government refuses to confuse pension reform and a general increase in the tax burden, it n evertheless considers that the requirement of solidarity should lead to some typ es of income contribute to a greater extent to finance social protection . Final ly, the pension reform will also need to continue to progress towards greater eq uity between the pension plans of public and private sector. The Act of August 2 1, 2003 and the reform of the special arrangements made in 2007-2008 were brough t closer together and build a large common set of principles: contribution perio d to qualify for a full pension, and introduction of a discount a premium, reval uation of pensions based on inflation. To ensure fairness in our pension plans, however, it is necessary to go further in the constitution of this common basis, taking into account the objective differences jobs, status and career between t he public and the private sector. Commitment No. 11: adapt the mechanisms of sol

idarity pensions to the reality of social needs. Under the first stage of consul tation with social partners, the Government wanted to discuss with them the ques tion of solidarity mechanisms 12 pension. Our pension plans offset because a large number of career setbacks as u nemployment compensation, uncompensated unemployment, sickness, disability, preg nancy, termination of activities for the education of children under the age ins urance for parents home. The funding of most of these periods is supported by th e Old Age Solidarity Fund. These mechanisms are strong protections. For example an unemployed quarters of valid insurance throughout the period he receives unem ployment insurance benefits and the specific solidarity allowance (ASS). These p rovisions are however numerous and complex, as pointed out by the organizations representing employees. Validation rules of these periods will therefore be trea ted as simplified in order to enhance their readability. In this context, the Go vernment wants to ensure that the current rules adequately cover the reality of the vagaries of life. For example, periods of unemployment without benefits are now covered, but so imperfect still. Commitment No. 12: Increase resources for t he mechanisms of solidarity through a supplementary financial effort of certain income. The Government considers that the overall increase in the tax burden can not be the answer to the imbalance of our pension plans whose primary cause is the aging of the population. Nevertheless, to ensure fairness of the effort requ ired of all economic actors, the Government hopes that additional contributions are introduced and assigned to the Old Age Solidarity Fund. They will underpin t he financing elements of solidarity within our system of pension insurance. They aim in particular to ensure greater participation of certain forms of income in the effort to balance pension plans. They will also continue efforts to reduce fiscal and social niches undertaken by the Government since 2007. After the firs t stage of consultation during which the issue of funding our pension plans has been the subject of discussions with social partners, the Government intends to include in particular the field of pension reform the establishment of an additi onal contribution of solidarity on the high income and capital income. Regarding individuals, this additional contribution will not be entitled to refund under the tax shield. The additional resources collected will be allocated to the mech anisms of solidarity pension, through the Old Age Solidarity Fund (FSV). Commitm ent No. 13: continuing convergence between the pension plans of public and priva te. In accordance with the principle of fairness that must govern the pension re form,€measures to increase the duration of activity apply to all employees, the public and private. Specific pension rules exist elsewhere in the civil service. They are complex and, for many of them, the fruit of history, some dating to th e nineteenth century. The Government has opened a consultation with specific org anizations 13 union of the Public Service on this subject, and assured them that these rules w ill in no case caricatured. They can not however be regarded as sacrosanct, when the factors that led to their establishment have disappeared or have changed. W ith regard to special diets, these changes apply in respect of the timetable for implementation of the reform of 2007. IV - ENSURING THE SUCCESS OF REFORM IN THE LIFE The Government set itself the goal of restoring the balance of pension plans. To meet this goal, several conditions are necessary, including improving the emplo yment rate of older workers and the reduction in the duration of unemployment. M onitor compliance steadily in the coming years is essential to the success of th e reform of 2010. Commitment No. 14: providing overall governance of pension sch emes based on periodic meetings with social partners. The Government hopes that meetings with the social partners are organized periodically. The Guidance Counc il pensions would be fully involved in these appointments, as a forum for the st udy of pension and mutual diagnosis of their financial situation. Based on obser vations made during these meetings, adjustments could be proposed. These route p oints are an opportunity to ensure compliance with certain key objectives for th

e preservation of our pension schemes. The coverage of future commitments, maint aining an adequate replacement rate for insured and improving the employment rat e of older workers are three objectives that should follow in priority. 14 SUMMARY OF THE PRINCIPLES OF REFORM I - RESTORING CONFIDENCE IN THE FRENCH SYSTEM OF RETIREMENT Commitment # 1: save the PAYG system. Our pension system is based on the distrib ution, which is the foundation for solidarity between generations. Even if it is necessary to encourage retirement saving devices, switch to a funded system wou ld not solve the imbalances of the current system. Commitment # 2: ensure the re turn to equilibrium of our pension plans in the medium term. Only a return to ba lance pension plans, not just reducing their deficit, is likely to restore confi dence in the future of our pensions. It is the objective set by the Government t o determine, for this purpose, the plan rules by 2020 or 2030. Systemic reform o f the method of calculating duties have advantages in terms of transparency of t he system. If it was not coupled with a longer duration of activity, the approac h does, however, no response to the financial imbalance alone, except to accept a lower pension, which the Government refuses. Commitment # 3: Do not cut defici ts by reducing the pensions of retirees today. Unlike what happened in other cou ntries, the Government refuses to reduce the living standards of retirees today to solve the problems of pensions. Their purchasing power will remain secured by the indexation of their pensions on prices. These will in no case reduced. Comm itment # 4: Do not cut deficits by reducing the pensions of retirees of tomorrow . The Board of Retirement Guidance stated that the average level of pensions wil l continue to grow beyond inflation in the next twenty years as a result of impr oved careers. The Government intends to maintain this improved level of pensions . Commitment # 5: Improve the understanding and information of the French on the ir future pensions. The Government will propose new measures to allow the French to know earlier in their careers and their pension rights to use the devices to improve their future pensions. Simplification measures will be taken in respect of "poly-pensioners, that is to say the French, who belong to different pension plans. 15 II - MEET THE REAL CAUSE OF IMBALANCE OF OUR PENSIONS: THE DEMOGRAPHY Commitment # 6: discard any solution that would decrease the level of French lif e or increase unemployment. Everything must be done to protect the living standa rds of French and increase employment. Solving the pension problem by a massive rise in charges would be inconsistent with this objective. Le Gouvernement écart e donc toute hausse générale des impôts ou des cotisations sociales. Commitment # 7: responding to a demographic imbalance in demographic solutions. The difficu lties of our pension plans are the result of a demographic crisis - the aging of the population - which the crisis has only accelerated effects. Responding to t his demographic shock mainly by increasing the duration of activity is the only solution that is both fair and effective. Without prejudging the leverage used ( increasing the contribution period, decrease the statutory retirement age), is t he path that holds the Government. He now dismisses the idea of introducing a "s uper discount" from 60 years (the system known as the "pivotal age"), whereas th is would lead to lower pensions. Commitment # 8: Change the rules are very gradu al. No rule change overnight. The change will be gradual instead. Increasing the duration of activity over several years. The French will, upon presentation of the bill, visibility on the evolution of rules. This escalation is a strong prot ection, because it prevents people from going to retire soon see their life plan upset. Commitment # 9: Consider those who have had a harder life. Equitably dis tribute the effort between the insured is a central objective of the Government in the context of the reform. As such, he would move the social partners to exte

nd the device "long careers, which allows those who entered early on the labor m arket to retire before the other, and explore with them the necessary adjustment s, taking into account the extended duration of activity. It will also consider the hardship peculiar to certain careers, based on the definition of social part ners. Commitment No. 10: Stopping the French specificity in employment of older workers. The increased duration of activity will itself have a positive impact o n employment of older workers. The Government will ensure that this positive eff ect gives its full potential by encouraging the development of profound changes in human resources policy, working conditions and career development. Coordinate d action in these three areas is essential to encourage longer participation of older workers in businesses and in the public, as demonstrated by the examples o f Germany and Finland. 16 III - STRENGTHENING THE FAIRNESS AND SOLIDARITY OF OUR PENSIONS Commitment No. 11: adapt the mechanisms of solidarity pensions to the reality of social needs. Our system is deeply united because it provides very broad protec tion for retirement against the vagaries of life (unemployment, involuntary part -time, illness, etc..). The Government will ensure that these mechanisms reflect s the actual needs on the labor market, particularly in unemployment without ben efits. Commitment No. 12: Increase resources for the mechanisms of solidarity th rough a supplementary financial effort of certain income. To ensure a fair distr ibution of effort, including the Government will introduce a levy on extra high income and capital income. As individuals, this contribution will not be entitle d to refund under the tax shield. These additional levies will be used to financ e solidarity mechanisms, through the Old Age Solidarity Fund (FSV). Commitment N o. 13: continuing convergence between the pension plans of public and private. T he fairness of the reform implies that the increase in the duration of activity involves all French, public and private. Specific rules for the Civil Service ar e also subject to consultation with trade unions of the Public Service, to consi der those that would be better suited. With regard to special diets,€These chang es apply in respect of the implementation schedule of the 2007 reform. IV - ENSURING THE SUCCESS OF REFORM IN THE LIFE Commitment No. 14: holding periodic meetings with social partners, to ensure ove r time that the conditions for successful reform are met. Meetings with social p artners will be organized periodically to ensure compliance with certain key obj ectives for the preservation of our pension plans, such as maintaining a satisfa ctory rate of replacement or enhancement of the rate employment of older workers . 17