CAC 40 Pensions: €12 Billion in Liabilities Wiped Out by Rising Interest Rates
The pension liabilities of CAC 40 companies have fallen by more than 12 billion euros in one year, to 157.6 billion, according to the annual report by the employee savings consulting firm Galea EPS, published on July 16. This reduction in reported liabilities masks a less comfortable reality: the annual cost of employee benefits has surged by 38 percent.
This is one of the least-discussed financial developments of fiscal year 2025: without any pension plans being shut down or any pensions being cut, the 40 largest French companies by market capitalization saw their pension liabilities decline by 7.1% in one year, representing a reduction of more than 12 billion euros in social security liabilities on their balance sheets. The total now stands at 157.6 billion euros, according to Galea EPS’s CAC 40 barometer.
The mechanism can be summed up in one word: discounting. Under IAS 19, the accounting standard that governs the recognition of employee benefits in consolidated financial statements, pension obligations correspond to the present value of future pensions and benefits promised to employees. This value is calculated using a discount rate based on the yields of investment-grade corporate bonds. When these rates rise, the present value of future commitments automatically decreases, and the liability recognized on the balance sheet shrinks. The groups’ equity benefits directly from this, without any management decisions having been made.
Variations ranging from -61% to +37% depending on the group
Behind the average, the barometer reveals widely divergent trends, with variations in liabilities ranging from -61% to +37% depending on the group. Sensitivity to interest rates depends on the structure of the plans, the duration of the liabilities, the demographic profile of the workforce, and the proportion of defined-benefit plans that are still open. Groups with significant exposure to British or German pension plans—which are traditionally more onerous than French plans—do not react in the same way as those whose liabilities are limited to French-style end-of-career benefits.
A reduction in the balance does not reflect the flow. The annual cost of employee benefit obligations is rising by 38 percent, driven by the combined effect of rising interest rates (which increase the interest expense on the actuarial liability), wage increases, and the growing impact of senior employee agreements and end-of-career policies. These measures, encouraged by negotiations regarding the employment of experienced workers, result in new obligations for which finance departments must set aside reserves.
An indicator that is now of interest to investors
Finally, the study highlights that social commitments are gradually moving beyond the realm of actuarial specialists to become an indicator tracked by analysts and finance departments. The European CSRD directive, which requires detailed sustainability reporting, adds another layer of requirements regarding social data and its financial implications. IAS 19 provisions, the costs of retirement benefit plans, and sensitivity to discount rates now weigh on the interpretation of balance sheets, just as much as traditional financial debt. The next edition of the barometer will reveal whether the easing of interest rates that has begun in the eurozone will reverse this trend and inflate social liabilities once again.
