The French Social Security System Introduction

The French Social Security system is basically a number of statutory schemes:

a compulsory general scheme,
various "special" schemes covering specific categories of non-agricultural workers against all or some risks (usually old-age , with other risks being covered by the general scheme),
the autonomous old-age and health insurance schemes covering non-agricultural self-employed workers. The basic old-age insurance schemes are supplemented by compulsory supplementary pension schemes,
an agricultural scheme covering employees and non-salaried workers in the agricultural sector against all risks. The provisions applying to employees are similar to those applicable in the compulsory general scheme,
an unemployment insurance scheme covering all wage earners and managed by representatives of employers and employees,
the supplementary pension schemes , ARRCO and AGIRC , which are compulsory for all employees affiliated to the general and agricultural schemes.

This paper deals only with the general scheme, the unemployment insurance scheme and the supplementary pension schemes.

The general scheme , introduced in 1945 , was initially intended to cover the entire population. The creation of universal coverage was met with opposition however, whether from workers in sectors already covered by a scheme which they wished to maintain, or from self-employed workers who refused to be brought into the new scheme.

Organisational structure

The general scheme is managed by a network of local, regional and national institutions. These institutions are administered by representatives of employers and employees under the supervision of the French Social Security Ministry.

Financing

The general scheme is mainly financed by contributions and taxes deducted from earnings. Contributions are calculated on the basis of percentage rates decided at national level and are borne partly by employers and partly by employees. The contribution rates and earnings ceilings currently in force are shown in the table annexed to this paper. Beside contributions, the general scheme is financed by two earmarked withholding taxes: the "Contribution Sociale Généralisée (CSG )" and the "Contribution pour le Remboursement de la Dette Sociale (CRDS )".

The CSG is paid on income from employment, replacement income, property income and investment income. The CRDS, which came into effect on 1st February 1996, is also paid on all income. All persons treated as residents of France for income tax purposes and subject to a French compulsory health insurance scheme are liable to the CSG at the rate of 7.5% and the CRDS at the rate of 0.5% on their earnings.

Persons subject to the compulsory health insurance scheme who are not treated as residents of France for income tax purposes are liable to employees’ health insurance contributions at the 5.5% rate applicable before 1st January 1998 .
Persons in receipt of a retirement pension who are not treated as residents of France for tax purposes but subject to a compulsory health insurance scheme are liable to taxes on their compulsory supplementary pension and voluntary supplementary pension (3.2 % and 4.2 % respectively). Pensioners treated as residents of France for tax purposes and liable to the CSG at the rate of 6.6 % (or the reduced rate of 3.8 %), pay no tax on their basic pension and a 1% tax on their supplementary pension (s) (both compulsory and voluntary).

Foreign employers who have no place of work in France are required to report and pay Social Security taxes and contributions to the single institution in charge of collecting the contributions , namely the URSSAF in Strasbourg (Strasbourg (Centre national de firmes étrangères – CNFE), 16 rue Contades - 67307 SCHILTIGHEIM CEDEX www.strasbourg.urssaf.fr - urssaf.strasbourg@urssaf. fr).

For unemployment, contributions are payable to GARP (14 rue de Mantes BP 50 -92703 Colombes Cedex).

For supplementary pensions, the relevant body is :

CRE IRCAFEX
Délégation internationale
4, rue du Colonel Driant
75040 PARIS CEDEX 01

Scope and coverage

The compulsory general scheme:

provides coverage against all risks for wage earners in the industrial and trade sectors, with the exception of those covered by a special scheme ,
provides family benefits to the entire resident population ,
provides sickness and maternity benefits in kind for specific categories of persons on a compulsory basis (e.g. students in receipt of certain benefits). The “CMU”, the Universal Health Insurance Coverage programme, covers all people living in France who are not affiliated to a compulsory scheme, either as insured persons or dependants.

The general scheme is supplemented by an unemployment insurance scheme and various compulsory supplementary pension schemes.

In France, all employers hiring an employee are first required to file a statement of employment with the relevant institution in charge of collecting social security contributions (URSSAF). The statement enables registration for social security purposes of employees without a Social Security Number, as well as registration for unemployment insurance purposes. For supplementary pension schemes, employees are registered with the scheme to which their employer belongs which will depend on the company's location or field of activity.