One Winner From Macron’s Pension Fight May Be Investment Industry

(Bloomberg) -- Emmanuel Macron is inching closer to passing his overhaul of France’s pension system -- and that is good news for the investment sector.

While the president has made clear he wants to keep France’s public contribution-based system rather than shifting to something more like the 401(k)s in the U.S., the bill to be presented to the cabinet Friday still comes with opportunities for banks and insurers.

The threshold where high earners will be exempt from contributing to the public system will come down and they will still get the same preferential tax rates on income from private retirement accounts. That should encourage companies to offer more advantageous pension plans.

The changes could free up as much as 5 billion euros ($5.5 billion) a year that could potentially be managed by the investment industry, according to a report by a pensions management association obtained by Les Echos newspaper. French banks and insurers such as CNP Assurances and Axa SA may be best placed to win a piece of that business.

Macron’s efforts to upgrade the French public pension system is one of the flagship reforms of his presidency and provoked rolling strikes from early December that paralyzed transport in Paris at times. Since the government agreed to talks on its proposal to raise the retirement age, the more moderate unions have suspended their opposition and the demonstrations have begun to fade.

The overhaul is part of a broader effort to channel French savings to more productive ends. Another law passed in October increased the incentives for private pension plans. That could also drive more business toward CNP and French asset manager Amundi SA, according to Bloomberg Intelligence.

The government has also made it less attractive to invest in the Livret A, a low-risk public investment product that’s the default option for many French savers. The Livret A was created by Louis XVIII to raise funds to pay debts accrued during the Napoleonic wars.

But capitalism is still controversial in France.

Axa removed a presentation on the impact of Macron’s reforms from its website this month after it was cited by the government’s opponents as evidence of a plan to boost private insurers. Also this month, BlackRock Inc.‘s Paris headquarters was attacked by protesters.

A spokeswoman for Axa said the document was aimed at internal staff, and that it mistakenly suggested that the current reform would encroach on pensions. The document meant to refer to a 2017 study that forecast a drop in the payments, she said.

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