2004, a record year for social security contributions

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In 2004, the revenue from social security contributions gathered by ACOSS outstripped forecasts to reach levels not seen for many years. Employer associations have decided to return to the boards managing the various social security funds, while ACOSS intends to improve the collection of contributions.Original Abstract - Required

In 2004, the Central Agency for Social Security Funds (Agence centrale des organismes de Sécurité sociale, ACOSS), which is actually the bank for French social security funds, collected close to EUR 290 billion. These figures, which were presented by the head of the Central Agency for Social Security Funds, Louis-Charles Viossat, at a press conference on 7 February, organised by the current chairman of the Agency, Pierre Burban, Professional Craftworkers’ Union (Union professionnelle artisanale, UPA), have generated a surplus of EUR 3.4 billion. In their opinion, given that the cash flow variation is not forecast to exceed EUR 10 billion in 2005, down from a record EUR 17.6 billion the year before, the future looks rather good.

These statistics, published 20 months after measures put in place for the pension system (FR0309103F) and eight months after those implemented for the health insurance system (FR0406105F), were the subject of a presentation at the Central Agency for Social Security Funds board meeting on 25 February 2005.

ACOSS

Social security contributions calculated at company level have been paid into the Central Agency for Social Security Funds since 1967. This body administers and coordinates the collection activities of Agencies for the Collection of Social Security and Family Allowance Contributions (Unions pour le recouvrement des cotisations de Sécurité sociale et d’allocations familiales, URSSAF), created in 1960, in metropolitan France as well as the General Social Security Funds (Caisses générales de Sécurité sociale) in the overseas départements.

It redistributes these funds to the four branches of the national general scheme (industrial accidents, family, health and old age).

In addition, it collects social security and tax contributions, including the General Social Security Contribution (Contribution sociale généralisée, CSG), created in 1991 to pay down the social security debt and the Social Security Debt Reimbursement Contribution (Contribution au remboursement de la dette sociale, CRDS), set up in 1996, on behalf of other agencies and allocates them, mainly to the Old-age Solidarity Fund (Fonds de solidarité vieillesse, FSV), created in 1994, the Social Security Debt Redemption Fund (Caisse d’amortissement de la dette sociale, CADES), set up in 1996, the Fund for the Financing of the Overhaul of Employer Social Security Contributions (Fonds de financement de la réforme des cotisations patronales de Sécurité sociale, FOREC), created in 2001, etc.

ACOSS thus has the following threefold mission:

• To collect social security and tax contributions.

• To act as a bank for social security funds.

• To provide a public service to contributors, who are also users.

Most debate on the general direction and policies to be followed takes place in the boards of the various national social security funds, including the National Salaried Employee Health Insurance Fund (Caisse nationale d’assurance-maladie des travailleurs salariés, CNAMTS), National Family Allowance Fund (Caisse nationale des allocations familiales, CNAF), and the National Salaried Employee Old-age Fund (Caisse nationale vieillesse des travailleurs salariés, CNAVTS).

Since the social security system was overhauled in 1995, the law has stipulated that the ACOSS board be made up of 30 members. This board is supported by five specialised committees. It also includes representatives of ministries. The law provides that the board make its views known on the commitments undertaken between the state and the jointly run agency within the framework of annual and multi-year target agreements modelled on the National Salaried Employee Health Insurance, National Health Insurance Spending Target (Objectif national des dépenses d’assurances maladies, ONDAM).

Since September 2001, the board had only had 21 members, representatives of insured wage-earners, the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT), the French Confederation of Professional and Managerial Staff-General Confederation of Professional and Managerial Staff (Confédération française de l'encadrement-Confédération générale des cadres, CFE-CGC), the French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC), the General Confederation of Labour (Confédération générale du travail, CGT), the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO) and employers’ associations UPA, and the National Association of the Self-employed and the National Body of the Self-employed (Union nationale des professions libérales & Chambre nationale des professions libérales, UNAPL-CNPL), Movement of French Businesses (Mouvement des entreprises de France, MEDEF) and the General Confederation of Small and Medium-sized Enterprises (Confédération générale des petites et moyennes entreprises, CGPME) had decided to express their disagreement with regard to government policies by refusing to appoint representatives to the Agency. However, during the last ACOSS board meeting on 25 February 2005, the MEDEF the CGPME indicated that in light of government policy, they intend to once again designate representatives to sit on the various bodies, including URSSAF.

ACOSS’s financial statement

Initial figures available for fiscal year 2004 show that ACOSS took in EUR 287 billion. This result, which represented an increase of 4.5% on 2003, is unprecedented and easily outstripped forecasts.

Contributions from the private sector alone accounted for approximately EUR 155 billion, an increase of 3.2% in the space of a year. This hike is greater than the increase in the total payroll ( 2.8%) in a context of a relatively stable position of salaried employment ( 0.3%). It is mainly due to the Independent Living Support Contribution (Contribution solidarité autonomie, CSA). All public and private sector employers are required to pay this contribution for employees for whom they pay an employer contribution for health insurance to one of the core French health insurance funds. The Independent Living Support Contribution is initially paid to ACOSS in accordance with the provisions of the Act relating to the support of independent living for the disabled and the elderly (Act 2004-526, 30 June 2004). The Agency’s surplus for 2004, prior to the confirmation and consolidation of its data scheduled for June 2005, is approximately EUR 3.5 billion.

There are several reasons underpinning this unprecedented success.

Firstly, the increased revenue can be linked to new initiatives, such as the Independent Living Support Allowance. The instructions for collection laid down by ACOSS have substantially improved the contribution payment rate. However, the Agency believes that there remains room for improvement, since it estimates that the annual shortfall as a result of illegal employment stands at EUR 4 billion.

In addition, the scrapping of specific schemes such as the Fund for the Financing of the Overhaul of Employer Social Security Contributions (Fonds de financement de la réforme des cotisations patronales de sécurité sociale, FOREC), created to offset the loss of revenue for social security funds as a result of various contribution-reduction measures (low wages, reduction of the working week, etc.), has increased revenue for ACOSS by close to EUR 16 billion. It is estimated that the partial compensation for spending covered by ACOSS and normally met by the Social Security Debt Redemption Fund or the Old-age Solidarity Fund generates another EUR 20 billion or more in new direct revenue. This does not take into account the approximately EUR 2 billion in contribution exemptions not offset by the state.

As a result, in 2004, ACOSS’s surplus enabled it to meet the funding needs of the social security system. Agency officials are very positive about the prospects for 2005.

Commentary

The tangible increase in contribution and premium revenue is a major and important step forward for National Social Security Funds given that the public sector deficit is currently running at EUR 1,000 billion. However, it remains heavily dependent on the economic situation and on the state honouring its commitment not to place the financial burden of its decisions on the shoulders of all the social security funds. The case of ACOSS raises the issue of jurisdiction and the joint-management system. It shows that even before the overhaul of pension systems and health insurance, with its fresh definition of governance, has come into force, the recent social spending deficits have been a good deal less colossal than they were originally made out to be. (Benoît Robin, IRES)