Julie Tréguier

In economics, the individual decision to retire is often seen as the result of a choice between work (paid employment) and leisure (retirement), the constraint being to have enough resources to meet one’s material needs until the end of one’s life. This decision brings several dimensions into play, such as risk aversion and social preferences, and those dimensions vary by whether one is a woman or a man. 

My analyses suggest that in deciding when to retire, men in France are attentive to financial incentives in the country’s contributive pension system. That is, they are more likely to retire at the moment when doing so will bring them the highest possible pension wealth (sum of all pension payments they can expect to collect from the time they retire to the end of their lives). Women, on the other hand, are more likely to take into account what the pension system has defined as legal retirement ages: either the age at which one can start collecting a pension, or the age at which the pension reduction for retiring without having paid into the system the minimum number of quarters no longer applies. 

Nonetheless, women as a group are quite heterogeneous on this point. When it comes to deciding to retire, the population groups generally identified as the most vulnerable do not resemble each other. Financial incentives play a greater role among women with very low incomes than women with low incomes and at least three children. The reverse is found for the criterion of reaching the legal age for collecting a pension (i.e., retiring “as soon as possible”). One possible explanation is that women with low incomes and at least three children are more attentive to family considerations when deciding when to retire. 

The 2003 reform affected financial incentives for retiring. First, by instituting a pension increase for working more—and therefore contributing longer into the system—than the requisite number of quarters, lawmakers wanted to encourage individuals to remain in the labor market longer. While the reform applied to both men and women, we have seen that men are more responsive to this kind of incentive. So men have delayed retiring more than women in order to increase their pensions. 

Women’s occupational careers, meanwhile, are more often “incomplete” in terms of French system contribution requirements; i.e., they are much more likely not to have worked—and therefore not to have paid into the retirement system—the requisite number of quarters. The 2003 reform also reduced the pension cut for leaving early, reducing the penalty women had incurred for “incomplete” careers and its effect on their pension amounts. So, on average, women’s pensions rose following the reform, and in proportions comparable to the increase in men’s pensions. 

But women’s situations in relation to the 2003 reform are once again heterogeneous. The pension wealth of women with extremely low incomes, many of whom delay their retirement to the age at which the penalty reduction no longer applies so they can receive the minimum retirement pension (an immediate effect of the reform that has continued ever since), has fallen due to the reform. By contrast, the average pension wealth of women in other income categories, less penalized for their “missing” quarters following the reform, increased significantly.