Planning for retirement is a vital aspect of financial well-being. In France, the retirement system provides income security for individuals during their golden years. This article aims to shed light on the workings of the retirement system in France, including contribution methods, benefit estimation, and how expat workers can participate and benefit from this system.
How does the retirement system work in France?
What are “Taux plein” and “âge légal de départ” ?
In the French retirement system, there are two important concepts to understand: “age légal de départ” and “taux plein.”
The “age légal de départ” refers to the minimum age at which individuals can retire and start receiving their pension benefits. Currently, the “age légal de départ” is 62 but will be pushed to 64 with the latest pension scheme reform of 2023.
On the other hand, “taux plein” refers to the full retirement age, at which individuals can claim their full pension benefits without any reduction.
While the “age légal de départ” is the earliest age at which individuals can retire (usually 62 soon 64), the “taux plein” is the age at which individuals can retire and receive their maximum pension entitlements (now it’s 67).
It’s important to note that retiring before reaching the “taux plein” may result in a reduction of pension benefits.
The retirement system in France
The retirement system in France operates on a pay-as-you-go basis. This means that the contributions made by the current workforce finance the pensions of current retirees.
This is different to what exists elsewhere where you save money, your whole life, to fill a pension find whose interests will come back to you when you retire.
The system is based on a three-pillar framework:
First Pillar: Basic State Retirement Scheme (Sécurité Sociale)
The Sécurité Sociale is the cornerstone of the French retirement system and is managed by the National Pension Insurance Fund (CNAV).
Eligibility for this scheme begins at age 62 for individuals born in 1955 or later, with gradual increases to age 67 for those born in 1960 or later. To qualify for a full pension, individuals generally need to have accrued a certain number of quarters (trimestres) of contributions.
Contributions to the Sécurité Sociale are deducted directly from salaries and are shared between employees and employers. The contribution rates are based on a percentage of the employee’s salary, subject to a maximum contribution ceiling. Expatriate workers employed in France are subject to the same contribution rates as French nationals.
Second Pillar: Mandatory Occupational Pension Schemes
In addition to the Sécurité Sociale, certain industries and professions have mandatory supplementary pension schemes. These schemes, collectively known as Agirc-Arrco, are employer-funded and provide additional benefits on top of the basic state pension. Expatriate workers employed in industries covered by these schemes are generally enrolled automatically and contribute accordingly.
Third Pillar: Voluntary Personal Retirement Savings
The third pillar consists of voluntary personal retirement savings options, such as private pension plans and individual savings accounts. These allow individuals to supplement their retirement income beyond the state and mandatory occupational pensions. Expats in France can also take advantage of these voluntary schemes to enhance their retirement savings.
How do I get my pension?
Estimating Retirement Benefits in France
To estimate retirement benefits, individuals can use online calculators provided by the French government, pension fund websites. These calculators take into account factors such as the number of quarters contributed, average salary, and the age at which retirement benefits are claimed. By inputting relevant information, individuals can obtain an estimate of their future pension entitlements.
To get to the website you’ll need your social security number.
Claiming Retirement Benefits
When the time comes to claim retirement benefits (from 62 now but 64 starting october 2023), individuals must submit a retirement claim application to the relevant pension fund.
The application should be submitted approximately four months before the desired retirement date. Once the application is processed, retirees receive regular pension payments directly into their bank accounts.
Retirement Benefits for Expat Workers in France
Expat workers in France generally have the same rights and obligations as French nationals when it comes to retirement benefits. They contribute to the retirement system through deductions from their salaries. Their eligibility for benefits is determined based on the same criteria as French citizens. Expats can access the online calculators and claim their retirement benefits in the same manner as their French counterparts.
How can I benefit from the pension I contributed to while working in France, even though I will not retire in France?
If you worked in several countries, you contributed in as many countries and as many scheme will apply to you.
The general rule is :
- You can ask for you retirement money in a country (monthly payments) when you reach the retirement age in that country. ie : in France Retirement age is soon 64 and in Germany 65. You can ask for your french benefits at 64 and german at 65
- Your benefit will be proportional to your contribution. the more you contributed, the higher the benefit.
- It can be paid in any country.
Final tip : some states have agreement with each other to ease that whole process. That’s of course the case for all EU countries and also Brazil, among others.