Frances Agirc-Arrco Cuts Deficit, Adopts SRI Charter

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France’s mandatory pension scheme for the private sector, Agirc-Arrco, has cut its deficit to €1.4bn and adopted a socially responsible investment (SRI) charter for its reserves.

The results are for the year ending 31 December 2018, just before the long-planned merger of Agirc, the scheme for managerial staff and executives, and Arrco, the scheme for private sector employees, came into effect.

Agirc-Arrco said the gap between its resources and expenses, which it refers to as the technical deficit, fell from €2.9bn to €2bn in 2018. This was due to favourable economic conditions and management by the social partners.

Investment returns of almost €500m and an exceptional gain of €100m helped further reduce the technical deficit. 

Agirc-Arrco is a pay-as-you-go scheme, but has €60.6bn of reserves. The scheme is targeting a return to financial equilibrium in 2020.

It also announced a new SRI charter for its reserves, as requested by the social partners. The charter was also in line with commitments made as part of an official agreement struck in late 2017 and “the principles underpinning complementary retirement provision”.

Agirc-Arrco indicated that it aimed to sign up to the UN-backed Principles for Responsible Investment.

According to the scheme, the integration of environmental, social and corporate governance factors “generates the long-term creation of societal values” by weighing in on companies’ behaviour with a view to improving corporate social responsibility policies.

In a presentation pack, the scheme said the approach did not introduce any factor that would negatively impact investment returns and could in fact strengthen performance over a long period.

The SRI charter defined the main pillars of the scheme’s general investment policy, it said.

In addition to obtaining the financial performance necessary for efficient multi-year management of an unfunded pension scheme, the investment strategy would also aim to “contribute to preserving the natural environment and well-being”, and “encourage social progress”.

Agirc-Arrco has 18m members and 1.7m employers. The scheme pays out more than €79bn annually to pensioners.