Where do you go to retire in France if you don’t have too much money? Certainly not the Côte d’Azur, where shriveled millionaires in small trunks frolic on large yachts. The less prestigious departments of Charente or Midi-Pyrénées may be a better bet: there, you can buy an ancient barn for €11,000 and tend sheep into your dotage.
French-born BNP Paribas investment bankers may not be reduced to shepherding in the mountains when they return to France for their retirement, but unless things change they probably won’t be on yachts either. Newspaper Liberation reports that many are finding their French pensions greatly reduced thanks to a cunning clause in BNP’s employment contract.
The pension shock is affecting senior French BNP bankers who spent time working for the company at its Harewood Avenue office in London, its 7th Avenue office in New York, or its Collyer Quay Office in Singapore over the past decade. Around nine years ago, Liberation says BNP introduced a new clause into its overseas contracts giving the bank the option to accrue French retirement benefits for its employees based upon the salaries they would receive if they were working for the bank in France, rather than the salaries they actually received working overseas.
As bankers don’t earn much in Paris, this clause has had a big impact. Liberation looks at its effect on a pseudonymous trader, ‘Thomas.’
Thomas was earning more than €1m in London. However, instead of accruing retirement benefits for Thomas based upon his pay packet of €1m, BNP accrued benefits as if Thomas were earning €100k. His French retirement pot is depleted by €500k as a result.
Needless to say, this is causing some upset. Around 10 former very senior French investment bankers in London are reportedly challenging BNP’s right to do them out of their pensions. If they succeed, Liberation suggests others will follow. Retired French bankers may get their small trunks and big boats yet.