France considers pension and tax changes for 2027 budget

The French government is considering significant fiscal measures for the 2027 budget to reduce the public deficit, specifically targeting retiree income. Public Accounts Minister David Amiel has indicated that the state must choose between two primary options to save approximately 6 billion euros.

The first option involves maintaining the indexation of pensions to inflation, a move estimated to cost over 6 billion euros. To fund this, the government may suppress or significantly reduce the 10% tax abatement currently granted to retirees for professional expenses.

The second option involves de-indexing pensions from inflation, potentially limiting increases only to the lowest pensions, while simultaneously reducing the existing tax advantages. Minister Amiel stated that there can be ‘no half-measures’ to avoid further exploding the deficit. The final decision on these budgetary trade-offs will rest with Prime Minister Sébastien Lecornu.

Separately, the government has clarified its stance on employee savings plans (PEE) following a leaked working document. Officials have denied any intention to introduce new social contributions on profit-sharing schemes, assuring employees that such taxation is not being considered.