Sabine Montagne

Pension Funds Between Social Protection and Speculation Publication date : November 9, 2006

The on-going debate on the future and financing of French pensions is not likely to end soon. Can the system continue to be funded by “la répartition”, or sharing, which links generations as workers’ taxes pay for the pensions of the elderly — when it has been amply demonstrated that during the coming years the number of workers will drop inexorably? Will France be obliged to introduce a system of capitalisation, modelled on U.S. pension funds, in which workers’ performance, as reflected in the value of businesses, serves to finance pensions?
These are some of the issues that Sabine Montagne addresses here. She argues that the American system of pension funds, which aims to reconcile social protection with financial speculation and is based on the traditional English trust fund, should not be introduced in France. The trust fund dates back to the Middle Ages and was designed to manage property belonging to a third-party minor who would never acquire full, unfettered ownership of the property in question. After a thorough analysis of this system, Montagne shows why it was especially well suited to the dual function of pension funds.
Despite these arguments, the author goes on to explore the conditions under which pension funds could be adapted to French laws to provide a complementary source of financing.
Although in France the question of how to finance retirement pensions remains permanently on the agenda, the American system of capitalisation through pension funds is widely rejected without examination. By providing a well-researched analysis of the U.S. system, this book opens the discussion on the subject of pension funds and incites to further reflection.
The writer, a young economist, is already recognised as the French specialist in the field. Her contribution, which belongs to the regulationist school, offers an alternative to the dominant liberalism.

Sabine Montagne is a sociologist and research fellow of the Centre National de la Recherche Scientifique (CNRS) at the University of Paris-Dauphine.