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27/03/2018Pensions in France
If you are working or have worked in France then you are contributing or have contributed to a pension (subject to minimum earnings/salary).
Author: Katriona Murray
There are many different pension organisations which manage the pensions for different types of workers and self-employed workers depending on their specific business.
Irrespective of whether you are self-employed or a salaried worker, you will have been contributing to your basic social security pension and your additional complementary pension (complémentaire).
In order to qualify for the basic pension, you need to:
- Have attained the minimum pension age (currently between 60 and 62)
- Have stopped working (although, under certain conditions, once you have started to receive your pension, you are allowed to do a small amount of paid work)
- Have contributed the required amount of quarters or trimestres
The age at which you are able to retire and the amount of trimestres required in order to receive a “full” pension, will depend on the year you were born.
At best, a “full” pension will roughly equate to about half of the average of your best 25 years of earnings, provided that you have contributed the required amount of trimestres.
The additional complementary pension works on a points basis. So, for each year you earn or contribute you will receive a certain amount of points. Upon retirement, the complementary pension will be equal to the number of points earned over the years multiplied by the annual value of the point. This will provide you with an additional pension payment.
As well as contributing to your state and additional pension, you can make voluntary contributions to a private pension called a PERP (Plan d’Epargne retraite populaire). Please note however that whilst there may be tax advantages to contributing to such a scheme, the money paid in is essentially locked away until retirement and you can only take a lump sum of 20%.
Another, very tax efficient, alternative to regulated pension arrangements are assurance vies. I won’t go into too much detail here but suffice to say there are many good reasons why millions of French people use the assurance vie as their standard form of saving and investment.
If you work for a large private company, you may be a member of a collective retirement savings scheme such as a PERCO (plan d’épargne pour la retraite collective) or a PERE (plan d’épargne retraite entreprise). These would provide you with additional income on top of any other standard pension schemes.
If you have contributed to the state pension scheme of more than one EU country you may be entitled to a pension according to the rules of the country concerned and a pro rata share of the “EU pension”. This will take into the fact that you have worked in different countries in the EU and will aggregate all the periods of work in order to determine the “theoretical” amount of the full pension in the country doing the calculation. So, if you have worked in the UK and France the pension will be calculated as if you have worked the required number of years in the country from which you are claiming the pension.
No matter how long you have contributed, you will be entitled to a pension if it is even only a small amount.
If you have never worked or if you have a very small pension income upon retirement, depending on your level of income, you may be entitled to claim ASPA (allocation de solidarité aux personnes âgéesI). If you have a disability you may also be able to claim a benefit called ASI (allocation supplémentaire d’invalidité).
In any case, whether you are nearing retirement or still many years away, it is best to understand what your situation will be and start planning as early as you can. It is never too late to start putting aside whatever you can. Life expectancy is increasing and you want to be able to continue to live a good quality of life for as long as possible.
Please note that pensions are rather complex and this article is only intended to give a very basic overview. For any further questions or for a full review of your personal situation, please do not hesitate to contact me.
Whether you want to register for our newsletter, attend one of our road shows or speak to me directly, please call or email me on the contact details below and I will be glad to help you. The Spectrum IFA Group advisers do not charge for our reviews, reports or recommendations.
Katriona Murray-Platon
