New French Minister of Finance, Emmanuel Macron, has announced that he will seek to abolish so called ‘top hat’ pension schemes for corporate officers.
Following controversy around the pensions granted to the former CEOs of France Telecom and GDF Suez, and in spite of the increasing social security charges that have been levied on such schemes in recent years, the French government has decided that the current ‘top hat’ defined benefit system needs to be replaced by something ‘more understandable’ by the French people. These changes would only affect corporate officers of French companies, and should have no impact on all-employee defined benefit pension schemes.
Further details about the proposed changes are expected from the Ministry of Finance; however it is clear that over the coming years French businesses will need to redesign the way in which they provide executive pension benefits, to reduce costs whilst continuing to safeguard the existing rights of the beneficiaries.
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