Modelling France’s Agirc-Arrco supplementary pension scheme

Modelling France’s Agirc-Arrco supplementary pension scheme. The Agirc-Arrco federation runs a pension scheme complementary to France’s first pillar CNAV Old-Age pension scheme. This compulsory pay-as-you-go point system is second only to the CNAV by its size. It covers most private sector wage-earners, with 27 million contributors over a given year, and represents on average a third of pension income paid to 14 million pensioners. It is run together by trade unions and employer organisations. They determine most regulatory aspects of the scheme, such as contribution rates or the point’s buying price. Most notably, they set the annual revision of the point value to guarantee Agirc-Arrco’s reserve funds are at least equivalent to 6 months of benefits for the next 15 years. To cover this and other projection needs, the Agirc-Arrco technical department developed a microsimulation model in native Python to project the system’s future income and expenditure at an individual level until 2070 through a range of economic, demographic and regulatory hypotheses. Using a random sample of more than 2 million contributors, retirees and survivor pensioners, it models affiliation to the Agirc-Arrco scheme, labour-market transitions, wages, mortality and retirement decisions. It computes individual contributions, points bought during individual careers, and retirement and survivor pensions consequently paid by Agirc-Arrcos pension system. It is thus a key input for Agirc-Arrco’s decision makers, to ensure the scheme’s sustainability goals are met. It also provides periodic insights regarding the system’s joint management by social partners and is used for aggregate projections of the French pension system coordinated by the Retirement Orientation Council (COR). This presentation provides an overview of Agirc-Arrcos microsimulation model main features and graphical results, shedding light on France’s second most important pension scheme and sharing methodological choices of interest to the microsimulation community,