In France, the basic pension is topped up by compulsory supplementary pensions, which, like the basic pension, are financed on a pay-as-you go basis. For private-sector employees, the compulsory supplementary schemes are ARRCO, covering all categories of employees and AGIRC, covering only managerial and executive staff.
The basic pensions of the general scheme are paid by the Pensions and Occupational Risks Fund (CARSAT), the National Old-Age Insurance Fund for Employees of Ile de France (in the case of the Paris region), the Regional Old-Age Insurance Fund in Strasbourg (in the case of the Alsace Moselle region) or the General Social Security Fund (in the case of the Overseas Departments).
The 2010 pension reform Act raises the statutory retirement age for persons born after 1st July 1951, which will rise progressively from 60 to 62 years. At the same time, the age of automatic entitlement to a full pension (statutory retirement age + 5 years) rises to 67 for persons born after 1st January 1956. Persons with many years of service, who have a severe disability or who have worked in an unhealthy or physically stressful environment can claim their pension before reaching the statutory age.
The statutory retirement age is 62 for persons born after 1st January 1956 and 60 for persons born before 1st July 1951, increasing by 4 months each year for the generations born after 1st July 1951. Workers may however claim their pension later if they so wish. Individuals who continue to work after the statutory retirement age of 60 and who have paid contributions for longer than the qualifying period for a full pension (this depending on the year of birth), can obtain an increase of their pension.
The amount of the pension depends on three different factors:
The total insurance period is the effective period of insurance (contribution periods and
periods treated as such) under the insurance scheme. With the different reforms, the period
of insurance used to calculate the amount of the pension has increased progressively as
follows:
Thus, for an individual born in 1951, the pension calculation formula will be as follows:
basic salary x rate x total insurance period under the general scheme ÷ 163.
Persons with many years of service, who have a disability or who have worked in an unhealthy or physically stressful environment can claim their pension before reaching the statutory age.
For persons wishing to draw their pension before reaching the pension age and without the qualifying period of insurance for a full pension, a reduction of the pension rate applies. This is determined according to the age at which the person retires and the number of quarters of insurance completed. The reduction per missing quarter with respect to the qualifying period for a full pension or with respect to the age at which the pension is automatically paid at the full rate, is 1.625% for persons born in 1950, 1.5% for persons born in 1951, 1.375% for those born in 1952 and 1.25% for those born after 1952. The pension will continue to be paid at the reduced rate from then on.
Individuals with the requisite period of insurance for a full pension, and who continue working after the statutory retirement age (between 60 and 62 depending on the year of birth), qualify for a pension increase. This provision is applicable as of 1st January 2004, with different rates depending on the period during which the contributions were paid. For quarters completed after 1st January 2009, the rate of increase is 1.25% for each additional quarter.
Individuals aged 65 to 67 who have not completed the total insurance period required for their cohort under all basic schemes included, will be awarded a 2.5% increase of the total period for each additional quarter worked over the age required to qualify for a full pension.
The pension may be increased for the following reasons:
Individuals who have raised three children for at least nine years before their 16th birthday are entitled to a 10% pension increase. The increase is awarded to each parent receiving an old-age pension.
The increase awarded in respect of a dependent spouse is no longer payable as of 1st January 2011. It will continue to be paid to persons who were entitled to it prior to 31st December 2010. The amount of the increase is €609.80 per year. If the pension is paid on the basis of a total insurance period shorter than the qualifying insurance period for the year of birth concerned, the increase will be smaller.
This increase is awarded to old-age pensioners whose pension replaces a disability pension and to old-age pensioners whose pension is paid or revised for inability to work and who meet the requirements for the increase before the age of 65. To be entitled to such an increase, the pensioner must be in need of the constant attendance allowance for help with activities of daily living.
The reversion pension, like the widowhood allowance, is paid by the Regional Old-Age Insurance Fund, the National Old-Age Insurance Fund for Ile-de-France (in the case of the Paris region) or the Regional Old-Age Insurance Fund in Strasbourg (in the case of the Alsace Moselle region).
The previous pension reform provided for the gradual phasing out of the widowhood allowance as of 1st July 2004, as well as payment of the reversion pension regardless of the number of years of marriage and, as of 2011, regardless of age. The 2009 Social Security Financing Act reversed this provision however, reintroducing an age requirement for a reversion pension, while the widowhood allowance was reintroduced under the pension reform Act of 9 November 2010.
The award of a reversion pension to a surviving spouse is not automatic but subject to specific conditions of age and income.
Reversion pensions are paid to surviving spouses or surviving former spouses aged at least 55, whose income is below a given level. The income to be taken into consideration is the survivor's personal income or that of the new household in the case of remarriage, civil union (PACS) or common-law union. Persons whose spouse died prior to 1st January 2009 and who fulfilled the qualifying conditions at that date, are entitled to a reversion pension from age 51.
The amount of the reversion pension may not exceed 54% of the deceased spouse's pension or the pension to which the deceased spouse would have been entitled.
The amount of the pension increases by €91.12 per month for surviving spouses with at least one dependent child under 16 years of age. A 10% increase applies for surviving spouses who have raised three or more children.
Persons not meeting the age requirement for a reversion pension may qualify for a widowhood allowance. This is a temporary benefit intended to support the surviving spouse until they find a job or go back to work. It is payable to any person not meeting the age requirement for a reversion pension and whose personal income is below a certain level. The amount of the benefit is €570.21 per month.
For the surviving spouse to be entitled to a widowhood allowance, the deceased spouse must have paid old-age insurance contributions during at least three months of the twelve-month period preceding their death, not including the month in which they died.
For more information, visit the CNAV website
The employees' supplementary pension schemes are administered by supplementary pension institutions and by the federations heading these institutions.
Supplementary pensions are compulsory for all employees subject to statutory old-age insurance, whether paid through the general social security scheme, the Agricultural Workers’ and Farmers’ Mutual Welfare Fund or the Miners' Scheme. For private-sector employees, supplementary pensions are administered by ARRCO (Association for Employees’ Supplementary Schemes), covering all categories of employees (managerial and non-managerial), and AGIRC (General Association of Retirement Institutions for Executives) covering only managerial and executive staff.
The calculation of supplementary retirement pensions is points-based. Each year, the amount of contributions paid on the basis of a reference salary or income is converted into points, taking into account the unit purchase value of the point for the relevant tax year. The pension paid to the employee will be contingent upon the number of points accrued during the total period of insurance of the employee. To calculate the pension, the number of points accrued during the total period of insurance is multiplied by the value of the point at the time the pension is calculated. In these schemes the amount of the pension is proportional to earnings over the total period of insurance, rather than the 25 best years as applicable in the basic scheme.
Contributions to the ARRCO scheme by non-executives are based on their total earnings up to three times the social security ceiling. Managerial and executive employees pay contributions to both the ARRCO and AGIRC schemes: up to one time the social security ceiling to ARRCO and beyond one time this ceiling to AGIRC based on their whole earnings and up to eight times the social security ceiling.
Under both schemes, the normal retirement age is 65. However, a wage earner may claim an early retirement pension as early as 55. In this case, a reduction coefficient is applied to the pension: 7% per year between ages 55 and 59, 5% per year between 60 and 62 and 4% per year thereafter.
In some cases it is possible to receive a full-rate supplementary pension before 65, without any reduction: when a full-rate pension is awarded under the basic scheme, no reduction coefficient is applied to the supplementary pension.
The calculation of pension points takes account of both paid points and credit points. “Credit points” are credited for employment periods prior to the implementation of the scheme and for periods of illness - when the individual was working and subject to the scheme - of at least three consecutive months (scheme for managerial and executive staff) or 60 consecutive days (scheme for non-executive staff) and during which the customer received cash benefits for illness or industrial injury. The same applies if the individual was in receipt of a disability pension. Retirement points are also awarded for periods of receipt of unemployment benefits. The annual values of ARCCO and AGIRC points as of 1st April 2010 are:
If the recipient has raised, or is still raising children, the pension amount may be increased as follows:
Both schemes provide pensions for widows, widowers and orphans.
A surviving spouse or surviving former spouse (who has not remarried) may qualify for a reversion pension:
The pension amounts to 60% of the late spouse's accrued entitlement.
Under the ARRCO scheme, a fully orphaned individual can receive a supplementary pension if they are under 21 years of age at the time of their remaining parent's death, or under 25 years of age if they are a dependant of the remaining parent at the time of death. Supplementary pensions are also awarded to orphans aged over 25 who are recognised as disabled before the age of 21.
The orphan's pension amounts to 50% of the accrued entitlement of the late parent for each orphan.
Under the AGIRC scheme, a full orphan is entitled to a pension up to the age of 21. If the orphan is disabled before the age of 21 they are entitled to a pension regardless of age.
The pension amounts to 30% of the number of points accrued by both parents under the scheme.
For more information, visit the AGIRC ARRCO site.
