In France, private-sector employees' basic pensions are topped up by the compulsory supplementary pension scheme ARRCO-AGIRC, which is also financed on a pay-as-you go basis.
Basic pensions under the general scheme are awarded by:
France's statutory minimum retirement age is 62 for those born on or after January 1st, 1955.
In order to qualify for a full-rate pension at age 62, a claimant must have accrued a required number of quarters of contributions that is determined by their year of birth.
Once a claimant has reached a certain age, their pension will be calculated at the full rate regardless of how many quarters they have accrued. This age ranges from 65 to 67, as determined by the claimant's year of birth and circumstances.
The amount of the pension is determined by three factors:
The total period of insurance, which is used to determine the rate at which the pension will be paid, includes both periods of contributions paid to the various basic schemes (see Article L. 351-1 of the French Social Security Code) and periods treated as such, i.e. periods of cessation of work in the case of sickness, maternity, disability, industrial injury, military service, unemployment, etc.
Periods of employment abroad:
Periods of work abroad in a state with which France has a social security agreement may in certain conditions be taken into account for the purpose of determining the pension payment rate.
Under French legislation, the periods of work abroad completed prior to 1st April 1983 for which buyback contributions can or could have been made, are counted as credited periods of insurance when determining the pension payment rate once the person concerned has reached the legal minimum retirement age (Article R. 351-4 of the French Social Security Code).
A member's total insurance period is the actual length of insurance (contribution periods and periods treated as such) under the insurance scheme. With the different reforms, the period of insurance required for a full-rate pension has increased progressively to 166 quarters for persons born from 1955 to 1957. The required length of insurance then increases by one quarter for each 3 birth years, going up to 172 quarters for those born in or after 1973.
Thus, for an individual born in 1957, the pension calculation formula is as follows:
Under certain circumstances, workers can retire before statutory age without a reduction in their pension rate. This applies to pensions claimed on the following grounds:
To learn more about early retirement on grounds of disability: lassuranceretraite.fr
People who wish to draw their pension but do not have the qualifying period of insurance for a full-rate pension (50%) will receive their pension at a reduced rate. The percentage reduction is determined by the number of missing quarters and the claimant's year of birth: 1.25% for those born from 1953 (i.e. a decrease of 0.625 for each missing quarter). The pension will continue to be paid at the reduced rate from then on.
Individuals who have accrued the required length of insurance of insurance for a full-rate pension at age 62 (statutory age) and who continue working qualify for a pension increase. Applicable rates differ as determined by when these periods of employment were accrued. For quarters completed after 1st January 2009, the rate of increase is 1.25% for each additional quarter.
A parent can be awarded a length of insurance increase of up to 8 quarters per child:
For children born after January 1st, 2010, additional quarters for adoption and child-rearing can be shared between the parents. Indeed, they can determine who accrues the additional quarters or how the additional quarters will be shared within a 6-month period following the 4th anniversary of the child's birth or adoption.
Up to eight additional quarters may be credited to persons bringing up a child who has a permanent disability with a severity rating of 80% and qualifies for the special education disabled child's allowance (AEEH) or the disability compensation benefit (“prestation de compensation du handicap”/ PCH).
An individual can reach full-rate retirement pension age (67) but not have accrued the required length of insurance for entitlement to a full pension (all basic schemes combined). They can increase their length of insurance by delaying retirement beyond that age (whether or not they continue to work). In this case, their length of insurance will be increased by 2.5% for each trimester retirement is delayed.
Pensions may be increased for the following reasons:
The basic retirement pension cannot exceed 50% of the social security ceiling (€1,714 per month in 2021).
Lura was rolled out on July 1st, 2017, and does not apply:
The pension reform of January 20, 2014, instituted the single pension claim system (Lura) for individuals who have belonged to at least 2 of the following so-called “aligned” schemes:
Through Lura, these individuals, who are also referred to as “multiple-pension claimants,” are only required to submit a single pension claim and only draw a single pension (rather than several as before).
An individual can submit a pension claim to any of the pension funds to which they have belong. The funds then work together to compile the information needed to process the claim and calculate the pension.
In general, the competent scheme to calculate and pay the applicant's pension is the last one to which they belonged. However, priority rules may apply instead: this is the case when the insured was last a member of two aligned schemes at the same time or when Lura does not apply to their last scheme of membership.
The pension is then calculated and awarded by the competent scheme pursuant to its own rules and policies.
Reversion pensions, like the widowhood allowance, are paid by:
Reversion pensions are intended for surviving spouses and ex-spouses. They are not awarded automatically but subject to specific age and income tests:
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.
If the deceased spouse was married several times, the reversion pension is shared among the surviving spouses, prorated based on the number of years of marriage.
The surviving spouse can be awarded a pension increase of €98.72 per month if s/he has at least one child under the age of 16 and is not drawing a personal retirement pension.
A 10% increase applies for surviving spouses who have raised three or more children.
Persons having reached the qualifying age for a full pension, having claimed the pensions to which they are entitled and whose total pension income does not exceed €2,624.26 per quarter are entitled to an 11.1% increase in the amount of the reversion pension.
* Civil unions (Pacs) and common-law partnerships (concubinage) do not entitle the surviving partner to a reversion pension.
The widowhood allowance can be paid for 2 years to any person under 55 years of age whose personal income is below €2,344.87 per quarter and whose spouse paid old-age insurance contributions for at least three months (consecutive or otherwise) over the twelve-month period preceding their death.
The widowhood allowance is paid at a rate of €625.30 per month.
For more information, visit L'assurance Retraite's website.
The basic pension program under the general scheme does not provide for an orphan's pension. However, this exists under the supplementary scheme as well as certain special schemes.
Membership in a supplementary retirement pension scheme is 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 the Agirc-Arrco scheme, which is the result of the January 1, 2019, merger of the ARRCO scheme (Association for Employees' Supplementary Pension Schemes), covering all categories of employees, with the Agirc scheme (General Association of Retirement Institutions for Executives), covering only managerial and executive staff (“cadre” status).
Like the basic retirement pension scheme, Agirc-Arrco functions on a pay-as-you-go basis: the contributions paid by salaried workers and the employers are immediately used to pay current retirees' pensions.
It is a point-based system: each year, an individual's contributions are converted to retirement pension points and added to his/her account. To calculate the amount of your retirement pension, just multiply your number of points by the value of the point, which is determined each year.
Supplementary retirement pension contributions are calculated based on the pay components that go into the Social security contribution basis. As from January 1st, 2019, the Agirc-Arrco scheme uses a 2-salary-bracket contribution basis. A separate contribution rate applies to each salary bracket and is shared between the employer (60%) and the employees (40%).
|Basis||Employee's rate||Employer's rate||Total||Point calculation rate|
|Bracket 1: between €0 and €3,428 (1monthly Social security ceiling)||3.15%||4.72%||7.87%||6.2%|
|Bracket 2: between €3,428 and €27,424 (8 times the social security ceilings)||8.64%||12.95%||21.59%||17%|
The adjusted (or effective) contribution rate is the contractual contribution rate (or point calculation rate) multiplied by an adjustment factor of 127. Points accrued by employees on the basis of paid contributions (employee's share + employer's share) are calculated using the contributions resulting from the application of the point calculation rate. The surplus calculations that result from the application of the adjustment factor are used to finance the Agirc-Arrco scheme.
Two or three additional contributions are withheld, depending on whether the employee has executive (cadre) status:
Please also see: table of social security contribution rates and ceilings.
France's supplementary retirement pension schemes are point-based.
Points are determined by taking into account both those accrued through contributions and those awarded with no payment of contributions, i.e.:
Three factors are used to calculate retirement pension points: contribution basis, point calculation rate, and point purchase value.
Number of points = Contribution basis x Point accrual rate / Point purchase value
A supplementary retirement pension is awarded at the full rate to individuals:
A supplementary retirement pension can be awarded at the full rate before age 62 if the applicant has been awarded his/her basic retirement pension on the basis of a long career or on the basis of permanent inability to work.
On January 1st, 2019, the unified Agirc-Arrco scheme rolled out a temporary pension increase/ decrease system. It is intended as an incentive for members to keep working beyond the age at which they become eligible for a full-rate retirement pension.
This system only applies to members who were born on or after January 1st, 1957, and who become eligible for a full-rate Agirc-Arrco retirement pension after January 1st, 2019.
The 3 circumstances under which an increase/decrease applies are as follows:
The gross amount of the supplementary retirement pension is calculated as follows:
The amount of a member's pension is proportional to their earned income over their entire career, not just their 25 best-earning years as is the case for the basic scheme.
The amount of the pension is proportional to the member's earned income over their entire career, not just their 25 best-earning years as is the case for the basic scheme.
There are two types of child-related top-ups:
Those who qualify for both of the above are awarded the higher of the two top-ups.
To learn more: www.agirc-arrco.fr
A surviving spouse or surviving former spouse (who has not remarried) may qualify for a reversion pension. Surviving domestic and civil union (Pacs) partners are not eligible for a reversion pension.
Unlike under the basic scheme, this reversion pension is awarded with no means test.
The pension amounts to 60% of the late spouse's accrued entitlement.
Under the Agirc-Arrco scheme, only a child who has lost both parents can receive a reversion pension:
An orphan can be awarded a pension on the basis of each parent's entitlements. If the remaining parent's death occurred after January 1st, 2019, the orphans' Agirc-Arrco reversion pension will amount to 50% of the entitlements accrued by one or both parents.
If the remaining parent's death occurred prior to January 1st, 2019: