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My perspective on markets, the economy and events that matter to investors.
France: a EUR 422 billion pension system and a tightening budget
Information as of 20 October 2026. Pension system and aggregate public finances: 2025; detailed spending composition: 2024, the latest available functional breakdown. Some figures are provisional. COR projections are a conditional scenario.
Pensions are one of France’s largest financial commitments. Their cost restricts the budgetary flexibility of a country that must also fund health, education, defence and the servicing of substantial debt.
How much does the pension system cost?
According to the Conseil d’orientation des retraites (COR), gross expenditure of the mandatory pension system reached EUR 422.2 billion, or 14.1% of GDP, in 2025. Around EUR 401 billion consisted of retirement and survivor pension benefits; the broader total also includes administration and solidarity-related activities. This represents roughly one quarter of all public spending, rather than the central-state budget alone. The system provides income to older people and is financed through contributions, taxes and transfers. Source: COR, June 2026, pp. 65 and 85–87.
Where does France spend its money?
In 2025, general government — central and local government and social security — spent EUR 1,714.2 billion, or 57.3% of GDP. Revenue amounted to EUR 1,561.7 billion; the deficit reached EUR 152.5 billion, or 5.1% of GDP, and year-end gross debt stood at 115.7% of GDP. Sources: INSEE government accounts, INSEE updated ratios.
The latest available complete functional breakdown covers 2024:
Social protection and health together account for approximately 57% of spending in this breakdown. Other functions include around EUR 60 billion of debt interest. Pensions are already included in social protection and should not be added again. Figures are rounded. Source: INSEE, 2024 COFOG breakdown.
How serious is the problem?
The scale of expenditure differs from the financing gap. COR estimated the pension-system deficit in 2025 at EUR 5.1 billion excluding financial income and expenses, or EUR 1.3 billion including them. This balance already incorporates government contributions and balancing subsidies to some schemes.
In COR’s reference scenario, pension spending remains close to its current share of the economy — 14.2% of GDP in 2045 — while the deficit excluding the financial result rises to 0.9% of GDP. Both population ageing and future funding sources affect the balance. This is an assumption-dependent projection, rather than a certain outcome. Sources: COR, pp. 91–92, COR projection summary.
My assessment: France’s main challenge is a large spending base that is difficult to change quickly, alongside a persistent deficit across its public finances. Pensions limit room for other priorities, but repairing the budget also requires examining health, service efficiency and revenue. Higher employment and productivity can broaden the funding base; changes to benefits and contributions require a gradual, predictable approach.
Posts reflect the author’s personal views as of publication. They are not investment recommendations.