The French social security system is basically a number of statutory 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. This paper deals only with the general scheme, the unemployment insurance scheme and the supplementary pension schemes which cover all salaried workers.
The general scheme is managed by a network of local, regional and national institutions organised by risk and administered by representatives of employers and employees under the supervision of the different ministries with responsibility for social security (the Ministry of Health and Labour issues, the Ministry of Finance and the Economy, and the Ministry of Labour, Employment, Vocational Training and Industrial Relations).
The general scheme is financed mainly by contributions and taxes deducted from earnings, which account for 80% of total revenue. Contributions are calculated on the basis of percentage rates decided at national level and are borne partly by employers and partly by employees. The two social welfare taxes, the "Contribution Sociale Généralisée" (CSG) and the "Contribution pour le Remboursement de la Dette Sociale" (CRDS) are borne by employees. Current contribution rates and earnings ceilings are given in appendix. The CSG and CRDS are paid on income from employment, replacement income, property income, investment income and gambling 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% on earned income and 6.2% on replacement income) and the CRDS at the rate of 0.5% on their earnings.
Pensioners in receipt of a French pension and treated as residents of France for tax purposes are liable to the CSG at the rate of 6.6% (or the reduced rate of 3.8%) and a 1% tax on their supplementary pension(s) (both compulsory and voluntary).
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 under the general scheme).
The compulsory general scheme:
The general scheme basic pension is supplemented by various compulsory supplementary pension schemes.
There is also an unemployment insurance scheme, which covers all employees subject to the general and agricultural schemes.
In France, all employers hiring an employee are first required to file a declaration of employment with the relevant institution in charge of collecting social security contributions (URSSAF). The declaration 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.
As part of the effort to simplify administrative formalities, unemployment and wage guarantee insurance contributions on salary paid after 1st January 2011 must be declared and paid to the agencies responsible for collecting social security contributions (URSSAF) rather than the employment service (Pôle emploi) as was previously the case.
For more information on the collection of contributions, visit the ACOSS website at http://www.urssaf.fr.
Foreign employers who have no place of business in France are required to report and pay social security taxes and contributions to the single institution in charge of collecting the contributions, namely:
For supplementary pensions, the relevant body is:
To come under the compulsory general scheme two basic conditions must be satisfied:
The general scheme is divided into five branches: