The French Social Security System III - Retirement

2021

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.

A - Basic scheme

Basic pensions under the general scheme are awarded by:

  • The (regional) retirement and occupational health funds (caisses d'assurance retraite et de santé au travail/ CARSAT),
  • the Île-de-France national old-age insurance fund (caisse nationale d'assurance vieillesse d'Île-de-France) for the Paris region,
  • the general social security funds (caisses générales de sécurité sociale/ CGSS) for the overseas Departments,
  • the CSS in Mayotte.

1 - Eligibility requirements

a) Retirement ages

Retiring at 62 (statutory age)

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.

Retiring at 65 to 67 (age of automatic full-rate entitlement)

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.

b) How pensions are calculated (careers with only general scheme membership)

The amount of the pension is determined by three factors:

  • Basic salary or Average Annual Earnings (SAM): average annual earnings are the gross earnings on which contributions have been paid. The SAM is calculated on the basis of the insured's 25 best-earning years.
  • Payment rate: the maximum rate of 50% is reduced by a percentage determined by the difference between the number of quarters credited and the number of quarters required to receive the maximum rate, with consideration for individual's age and total period of insurance. The most advantageous calculation for the individual is used. The minimum rate is 37.5%.
  • The total length of insurance, including periods credited as periods of insurance, is used to determine the payment rate of pensions paid between the legal minimum retirement age and the age of automatic entitlement to a full pension (between 62 and 67 for persons born after 1st January 1955). The 50% full rate is payable to individuals having a total insurance period of 166 to 172 quarters (depending on year of birth), aged over 67 (for persons born after 1955) or belonging to specific categories (persons unfit for work, those with a permanent disability severity rating of at least 50%, disability-pension claimants, mothers with blue-collar employment, or combat veterans).

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:

  • Average yearly salary (25 best years) X rate (between 37.5 and 50%) X total length of insurance under the general scheme / 166 quarters (maximum length of insurance taken into account for those born in 1957)
Early retirement pension

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:

  • Retirement on the basis of permanent incapacity or arduous work:Workers retiring due to permanent incapacity for work attributable to an occupational illness or accident at work can claim a full-rate pension at age 60, regardless of their length of insurance. There are several possible scenarios as determined by the worker's degree of incapacity:
    • The worker may claim an accident-at-work pension with a permanent incapacity-for-work rating of at least 20%
    • The worker may claim an occupational illness pension with a permanent incapacity-for-work rating of at least 20%
    • The worker may claim an occupational illness or accident-at-work pension with a permanent incapacity-for-work rating of at least 10% and less than 20%. A worker can apply for a retirement pension on the basis of permanent incapacity for work if:
      • They were exposed to work-related risk factors for at least 17 years, and
      • Their incapacity is attributable to their work.
  • People with a long career may retire at age 60 or before if they have accrued a minimum length of insurance and contributions and began working at a very young age. The required minimum length of insurance varies depending on birth year, age at retirement, and age at which the retiree began working.
  • People with a disability may retire between ages 55 and 59 provided that they have a permanent disability percentage of at least 50% or have official disabled-worker status before December 31, 2015. They must also have, a certain length of insurance (including a minimum duration of employment-related contributions) during the period in which they were disabled. The required minimum length of insurance varies depending on birth year and expected age at retirement.

To learn more about early retirement on grounds of disability: lassuranceretraite.fr

Reduced-rate pension (rate reduction)

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.

Missing
quarters
Pension
rate
1 49,375 %
2 48,750 %
3 48,125 %
4 47,500 %
5 46,875 %
6 46,250 %
7 45,625 %
8 45,000 %
9 44,375 %
10 43,750 %
Increased pension rate (for those continuing to work beyond age 62)

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.

c) Increases in length of insurance

Child-related increase

A parent can be awarded a length of insurance increase of up to 8 quarters per child:

  • 4 quarters for maternity leave (90 days of daily benefits accrue a quarter) or adoption,
  • 4 quarters of child-rearing over the 4 years that follow the child's birth or adoption.

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.

The child disability top-up

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).

Delaying retirement

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.

d) Pension increase

Pensions may be increased for the following reasons:

  • The child-rearing increase: Individuals who have raised 3 children for at least 9 years before their 16th birthday are entitled to a 10% pension increase. The increase is awarded to each parent receiving a retirement pension.
  • The dependent-spouse increase is no longer awarded as of 1st January 2011. It will continue to be paid at a rate of €609.80 / year to persons who were entitled to it prior to that date and continue to meet the eligibility requirements.
  • The caregiver's increase is awarded to pensioners whose retirement pension replaces a disability pension and to pensioners whose pension is paid or revised for inability to work and who meet the requirements for the increase before reaching the age where they are entitled to a full pension (67). 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. As from April 1st, 2021, the amount of this increase cannot be less than €1,126,41 per month.
  • The pension-rate increase: Members who work beyond the age of automatic full-rate pension entitlement and whose aggregated length of old-age pension insurance under all basic pension schemes combined entitles them to a full-rate pension can continue working in order to increase the amount of their pension. For each quarter accrued beyond statutory pension age and after accruing the required length of insurance for full-rate pension entitlement, the member's pension will be increased by 1.25% per quarter (with a cap of 4 quarters per year).

e) Minimum and maximum pension rates

  • The Elderly Solidarity Allowance (Allocation de solidarité aux personnes âgées/ ASPA) is a monthly benefit that is awarded to low-income retirees residing in France. This means-tested benefit is calculated to bring claimants' income up to a level which is determined by family circumstances. It amounts to 903.20 € per month for a person living alone.
  • The Minimum pension (minimum contributif) is granted to those who are entitled to a full-rate pension but paid contributions on a low income. It comes to €645.50 per month, and can be paid along with supplements earned due to length of insurance or other factors. Whatever the circumstances, the minimum pension cannot bring the total amount of personal pensions (basic and supplementary) above a certain set monthly amount (€1,203.37).

The basic retirement pension cannot exceed 50% of the social security ceiling (€1,714 per month in 2021).

f) Multiple-pension claimants:  the single pension claim for aligned  scheme  members (liquidation unique des régimes alignés/ Lura)

Lura was rolled out on July 1st, 2017, and does not apply:

  • To individuals who had claimed one of their pensions of the same type from one of the aligned schemes prior to that date,
  • To farmers, private-practice professionals, nor to the special schemes that are not “aligned,”
  • To individuals born before 1953.

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:

  • The general salaried workers' scheme (Régime général des salariés/ RG)
  • The agricultural employees' scheme (Régime des salariés agricoles/ SA),
  • The self-employed workers' scheme (craftsmen, merchants, manufacturers).

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.

Calculation formula:

  • Pension = Average annual income X rate X accrued length of insurance / maximum length of insurance taken into account
  • Average yearly income: the sum of the individual's average salaries and income for their 25 best years under all aligned schemes combined. This sum must not exceed the amount of the applicable annual social security ceiling for each year being counted.
  • Rate: between 37.5 and 50%. When the rate is determined based on length of insurance, length of insurance and equivalent periods accrued under the aligned schemes to which Lura applies are counted in addition to length of insurance under the other compulsory schemes to which the individual has belonged. The number of quarters credited under these schemes cannot exceed 4 per calendar year.
  • Accrued length of insurance: total of all quarters credited to the individual's account under the aligned schemes to which Lura applies.

2 - Survivors' entitlements

Reversion pensions, like the widowhood allowance, are paid by:

  • the regional pension and occupational health funds (caisses [régionales] d'assurance retraite et de santé au travail/ CARSAT),
  • the National Old-Age Insurance Fund for Île-de-France (Caisse Nationale d'Assurance Vieillesse d'Île-de-France) for the Paris region,
  • the General Social Security Funds (for the Overseas Departments),
  • the CSS in Mayotte.

a) Reversion pensions

Reversion pensions are intended for surviving spouses and ex-spouses. They are not awarded automatically but subject to specific age and income tests:

  • The surviving spouse or ex-spouse must be at least 55 years old (51 if the death occurred prior to January 1st, 2009).
  • The survivor's personal income or that of the new household in the case of remarriage, civil union (PACS) or common-law partnership must not exceed a given ceiling (€21,320 per year for a person living alone).

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.

b) Widowhood allowance

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.

c) Orphans

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.

B - Compulsory supplementary pension 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.

1 - Contributions

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:

  • CEG: overall balance contribution, intended to compensate for expenditure resulting from retirement pension claims before age 67,
  • CET: technical balance contribution which applies to employees whose salary is greater than the social security ceiling,
  • Apec (Association for the employment of executive staff).

Please also see: table of social security contribution rates and ceilings.

2 - Accruing points

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.:

  • for periods of employment accrued before the scheme became applicable,
  • for periods of incapacity for work lasting more than 60 consecutive days for which the insured drew daily health, maternity, or industrial accident insurance benefits.
  • periods for which the insured drew a disability pension
  • periods for which the insured drew unemployment benefits.

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

3 - Claiming a pension

Age

A supplementary retirement pension is awarded at the full rate to individuals:

  • who have reached the statutory age of 62 and have accrued the required number of quarters for entitlement to a full-rate basic retirement pension.
  • who have reached a minimum age of between 65 and 67, as determined by their date of birth, with no required length of employment.

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.

Amount

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 member applies for a supplementary retirement pension to start on the date they become eligible for the full rate under the basic scheme. A 3-year, 10% decrease will be applied to the amount of their supplementary retirement pension. The decrease will be lifted once the pensioner has reached aged 67 or more.
  • The member applies for a supplementary retirement pension to start one year after the date they became eligible for the full rate under the basic scheme: The decrease will not apply and they will be awarded the full amount of their supplementary retirement pension.
  • The member applies for a supplementary retirement pension 2 or more years after they became eligible for the full rate under the basic scheme: A 1-year pension increase of:
    • 10% will apply if your supplementary retirement pension claim is postponed by two years,
    • 20% if it is postponed by 3 years,
    • 30% if it is postponed by 4 years.

The gross amount of the supplementary retirement pension is calculated as follows:

  • Gross yearly pension amount = Total number of points X point purchase value.
  • Effective November 1st, 2019, the AGIRC-ARRCO point purchase value is €1.2714.

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.

4 - Family-related top-ups

There are two types of child-related top-ups:

  • The dependent-child top-up
  • The top-up for having or raising children.

Those who qualify for both of the above are awarded the higher of the two top-ups.

To learn more: www.agirc-arrco.fr

5 - Reversion pension

Surviving spouse

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.

Age requirements:

  • Without any age requirement if, on the death of the insured spouse, the survivor has 2 dependent children or is disabled,
  • from the age of 55 if the employee's or pensioner's death occurred on or after January 1st, 2019.
  • If the death occurred prior to that date, the age requirements set forth by the former Agirc and Arrco schemes apply:
  • From age 55 for the Arrco reversion pension if the employee's or pensioner's death occurred on or after July 1st, 1996,
  • From age 60 for the Agirc reversion pension if the employee's or pensioner's death occurred on or after March 1st, 1994. The eligibility age can be moved forward to 55. In this case, the amount of the Agirc reversion pension is lowered unless the claimant has been awarded a reversion pension from the basic scheme. 

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.

Orphans

Under the Agirc-Arrco scheme, only a child who has lost both parents can receive a reversion pension:

  • if they are under 21 years of age at the time of their remaining parent's death,
  • or if they are under 25 and a dependent of the remaining parent at the time of death,
  • or with no age requirement if they have been recognized as disabled age 21, whatever their age at the time of death.

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:

  • Orphans' Arrco reversion pension: 50% of entitlements.
  • Orphans' Agirc reversion pension: 30% of entitlements.