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Social Security and Retirement Planning in France
At a Glance:
- The French pension system is based on two mandatory schemes — a basic pension plan and a complementary occupational scheme.
- Elderly people with a very low pension may also benefit from a subsistence-level solidarity allowance.
- The French government officially supports some voluntary pension plans with tax benefits.
- Expats should check if they are covered by EU laws or social security agreements. Looking over all your retirement planning before moving to France is highly recommended.
The ASPA: A Minimum Income for the Elderly
Elderly people in France are entitled to the so-called allocation de solidarité aux personnes âgées (ASPA), the “solidarity allowance for the elderly”. It is administered and paid by the SASPA (Service de l’allocation de solidarité aux personnes âgées).
This is a non-contributory minimum pension: you can receive ASPA benefits even if you haven’t paid into any of France’s pension schemes.
However, you need to fulfill other conditions to claim it:
- You are 65 years or older. People with disabilities born after 1955 may be able to obtain benefits from the age of 62.
- You are an official and legal resident of France.
- You are a national of an EU or EEA member state.
- If you are from a country outside the EU or EEA, you need to have lived in France for ten or more years with a long-term residence permit or a temporary work permit.
- For refugees from outside the EU or EEA, this ten-year period may not apply.
The solidarity allowance amounts to a maximum of 9,638.42 EUR per year or 803.20 EUR per month for a single person (2017 figures). Please take into account that the ASPA is a means-tested benefit: it is aimed at low-income earners or at people who haven’t been able to work (e.g. for health reasons).
If you’re applying for the ASPA, your financial resources will be checked. If you already have a retirement pension that is lower than the ASPA, you will only get the difference between your regular pension and the ASPA maximum.
This solidarity allowance is a subsistence-level basic pension. Although expats could be entitled to it, it is hardly a comfortable income for your retirement years; in most cases, it won’t (or shouldn’t!) figure into your pension planning in France.
If you have come to France for work, you probably won’t be able to avoid paying regular pension scheme contributions. The following sections explain how these work and if or how expats can benefit from social security in France.
The Basic Pension: France’s Mandatory Insurance Scheme
Most French retirees don’t have to rely on the ASPA. They have been contributing to other mandatory pension schemes and have often made additional provisions on their own.
The first mandatory retirement scheme is the French state pension or basic pension (retraite de base). The retraite de base is not based on one single national pension scheme, but on hundreds of smaller schemes. Which you join depends on the kind of job you are doing in France: there are different pension plans for self-employed artisans and small business owners; for self-employed professionals (e.g. doctors, lawyers, actuaries, etc.); for farmers; for French civil servants and public-sector employees; for members of the clergy, etc.
Most expats working in France are probably employees or laborers in the private sector and will join the Régime général de la Sécurité Sociale. It is run by the Caisse nationale d’assurance vieillesse (CNAV), also known as Assurance retraite. You can find their contact details for various regions of France online.
How the Retraite de Base Is Funded
The basic pension scheme is funded by social security contributions from both the employer (60%) and the employee (40%). For employees in non-managerial positions, contributions to the retraite de base are based on their earnings for an amount of up to 3,269 EUR a month (2017 figure).
This limit is an official figure which is adjusted every year. It is called le plafond de Sécurité sociale, PASS for short. Earnings above the PASS limit are not taken into consideration.
The employee usually pays 6.9% + 0.35% of their salary (up to the PASS limit) for old-age benefits and survivors’ benefits respectively, while the employer contributes another 8.55% + 1.85% (2016 figures).
The money paid now is used to finance the state pensions of current retirees; future generations of workers and employees are supposed to cover tomorrow’s pensioners.
How to Qualify for Your Basic Pension
This is how you currently qualify for the retraite de base:
- As of 2017, the legal retirement age in France is 62. However, you won’t be entitled to receive a full pension before the age of 67.
- The qualifying period for a full pension is measured in quarters (trimestres). Everyone born after 1973 needs to have contributed for 172 quarters (or 43 years) to qualify. For those born between 1951 and 1972, the qualifying period ranges from 163 to 171 quarters.
- If you have been on unemployment or disability benefits or if you have focused on raising children, some of these quarters are usually taken into account for the qualifying period.
The retraite de base is supposed to amount to 50% of the insured reference earnings — the 25 years of their working life with the highest earnings.
How Much Will You Receive?
As a minimum, you will receive 7,555.50 EUR per year or 629.62 EUR per month. If your yearly retirement pension is lower than the ASPA, you can apply to have it topped up to 803.20 EUR per month (see the previous section). The retraite de base is capped at 1,634.50 EUR per month — exactly 50% of the plafond de Sécurité sociale (PASS).
Elderly retirees who can no longer get by independently may also have a right to the so-called allocation personalisée d’autonomie (APA). These benefits are aimed at all legal residents above the age of 60, no matter whether they are still living at home or have already moved into an assisted-living facility. The sum they receive depends on the amount of help they need according to an official assessment. It is not linked to the retraite de base.
The national pension plan is only the first pillar of France’s social security system. There is another mandatory pension scheme as well, which will be covered below.
The Complementary Pension: An Official Occupational Pension Scheme
In addition to the mandatory general pension scheme, the French government has introduced a complementary one — the retraite complémentaire; it’s an array of occupational pension schemes that cover various sectors and professions.
AGIRC and ARRCO: Occupational Pensions for Managers and Employees
Employees and managers in the private sector are normally covered by either the ARRCO or AGIRC schemes. These are administered by the umbrella organization GIE AGIRC-ARRCO. They can be contacted via their shared website.
ARRCO is short for Association pour le régime de retraite complémentaire des salariés or “Association for the complementary pension plan for employees”. AGIRC, on the other hand, means Association générale des institutions de retraite des cadres, or “Umbrella organization for pension schemes aimed at managers”.
How Much to Contribute to the Retraite Complémentaire
No matter which scheme you belong to, the complementary pension plans always work a certain way. You don’t earn coverage based on quarters, but you accrue a certain number of points.
First, your contributions are based on your gross salary (including bonuses, benefits in kind, tips, and other financial perks). Depending on your seniority and your salary, the basis for your contributions varies according to several tranches.
For an employee, there are two tranches: in the lower one, your gross salary is less than or equal to the plafond de Sécurité sociale or PASS limit (i.e. the maximum earnings for the basic pension plan — up to 3,269 EUR per month in 2017). If you earn more than that, up to three times this amount will be taken into account (i.e. 9,807 EUR as of 2017).
For managers, there are also two tranches, but the income thresholds are generally higher. For the first tranch, between one and four times the PASS limit is taken into consideration (i.e. up to 13,076 EUR per month in 2017). For high-earning managers, it’s four to eight times the PASS limit. Even if they earn more, the basis for contributions is still capped at 26,152 EUR per month (2017 figure).
The percentage of your salary that you’ll have to contribute is either 7.75% or 20.25% of your earnings for employees (lower-paid vs. higher-paid tranches) and 20.55% for managers (both tranches). Of the total amount, you only have to pay 40% yourself. It will be automatically deducted from your salary while the other 60% is paid by your employer.
The Occupational Pension Formula
By making these contributions, you’ll be earning points according to the following formula:
number of points earned = basis for contributions (i.e. salary up to capped amount) x percentage of contributions x 0.8 / current value of 1 point
The current value of point is assessed every year for each scheme. For example, one ARRCO point is worth exactly 16.1879 EUR in 2017.
The final pension will be calculated as follows:
number of points earned x current value of 1 point at retirement
In addition to the two mandatory pillars of the pension system, the French government also supports two kinds of voluntary retirement plans. They will be discussed on the following page.
We do our best to keep this article up to date. However, we cannot guarantee that the information provided is always current or complete.