Have you given any thought to retiring in France? Discover the inner workings of the French pension system, including laws, contributions, benefits, and applicable taxes.
The French way of life, culture, and cuisine has long had a magnetic attraction for working-age expats moving there from other countries. Many people have decided to spend their golden years in France because they get so much pleasure from living there. If you want to spend your retirement years in the republic, there are a lot of things you need to think about, of course. From working out the practicalities of relocating to France to choosing a location inside the nation, there are a lot of things to consider. You also need to be familiar with the regulations that govern pensions in France. For instance, to qualify for a state pension in France, you normally need to have worked for a certain number of years. You may also be able to transfer your pension plan from your native country in certain circumstances.
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The French pension system
The concept of taking pleasure in one's life is highly valued in French culture. They refer to it as l'art de vivre à la française, which translates to "the art of living French." In addition, they maintain this vigor for living throughout the various phases of life. If you are considering retiring in France, you will be relieved to learn that there are many different methods to make ends meet during your senior years. The state pension, the obligatory supplemental pension, and optional private pensions make up the three pillars that support the French pension system. Workers who wish to increase the amount of money they have saved for retirement might make contributions to all three pillars.
There are a lot of people in France who have retired. A little under 15 million citizens already get a pension from the state.
The French pension system is going to undergo a significant revision as part of the government's objectives. There have been suggestions made to either gradually raise the age at which one may retire or modify the amount of the minimum state pension. It is quite doubtful that any changes will be put into effect until at least 2023 because a general election will be held in 2022.
French state pension
Your social security (sécurité sociale) payments also pay towards a French state pension (retraite de base or minimum state pension). Everyone who is employed is required to make these payments.
Keep in mind that to collect the full amount of the French state pension, pensioners need to have worked for a minimum of 42 years (40 years if born before 1952). The minimum age limit will increase to 43 years in 2035 for everyone whose birth years begin after 1973. If you have worked and paid social security payments in France for at least 10 years, you may be eligible to receive a pro-rata French pension when you reach retirement age.
Retirees who have participated in the state pension program are eligible to receive up to half of their highest three years' worth of average yearly earnings. Those retirees who were born after 1953 are required to receive a minimum of 37.5% of their wages once they reach retirement age.
Compulsory supplementary pension
In addition, workers in France contribute to supplemental pensions, which are managed by organizations representing their respective industries. The two most well-known are AGIRC (for executives) and ARRCO (for non-executives), which were combined in 2003. AGIRC is for executives, while ARRCO is for non-executives. A pay-as-you-go system is used for these pension plans, and it requires both workers and employers to make payments.
Your pension fund rates are determined by the points you've accumulated throughout your working life. However, bear in mind that the amount of your pension is normally computed based on the average of your whole working wage. Unlike the state pension, this amount is not based on the greatest 25 years of your working salary.
Pensions advise and support in France
Even though this book offers general guidance on the pension system in France, you must seek the guidance of a professional if you are unclear about how the regulations about your specific situation.
There are a significant number of financially savvy individuals in France who speak English. One option for getting started is to go through our listings of accountants and financial advisers. The French Pension Insurance Authority, often known as l'Assurance retraite, offers guidance to those who are interested in retiring in France and submitting an application for a pension in France.
Who may get a pension in the country of France?
French pension age
The age of 62 is the minimum required to qualify for retirement in France (60 if you were born before 1 July 1951). On the other hand, authorities promote and incentivise individuals to remain in their current jobs for extended periods. For instance, if you work for more than three-quarters of a year after you reach retirement age, your pension will be increased. Note that to qualify for the full state pension, a person must wait until they are 67 years old if they were born after January 1, 1955.
Having said that, there are situations in which early retirement is a viable option. Persons who have worked from a very young age (the assurance retraite has a calculator for this), people who have disabilities, or people who have worked in harmful circumstances are often eligible for early retirement.
Those employees who fall into one of these categories may be eligible to retire up to two years earlier than the age required by law. Workers who have impairments, for instance, may be eligible for retirement between the ages of 55 and 59. On the website for French social security, you will discover information on the most important requirements.
Who is eligible for a pension from the French government?
If you have lived and worked in France for at least ten years, you are eligible to receive a pension from the French government. Another option is to inquire about the possibility of transferring a portion of your pension from your home country. This may be beneficial for some expats who are considering retirement in France.
What are your options if you are not qualified for the full amount of the French pension?
Your French pension might be affected by a variety of factors. For instance, the minimum wage for low-paid employees might be as high as 85 percent of the national average. The bare minimum payment is around 636 euros every month. In addition, those who attain the age of 65 in France are eligible for a minimum income benefit. Workers who have already established themselves in their jobs often do not qualify for this targeted minimum benefit.
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In addition, bear in mind that the payment rate for your French pension is determined depending on the total amount of contributions you have made. Therefore, you will not be eligible for the full pension rate if you have not made contributions for the whole length of the program. This also implies that you are eligible to take early retirement at the age of 55 or 57, but at a reduced pension rate (depending on the year you were born).
Pensions in France for expats
If you have worked in other European nations but do not match the criteria for a French pension, you may be able to combine the total number of years worked to qualify for a French pension or earn higher pension rates by combining the years spent in other European countries.
It is dependent on the nation in which you have previously worked and whether or not that country has a social security agreement with France as to the extent to which your periods of employment spent outside of France are counted. Switzerland is included in the group of nations with whom France has signed accords covering the whole bloc. In a similar vein, numerous nations outside of the EU.
Transferring and consolidating your UK pension via QROPS.
It may be possible for British expats who move to France to transfer their pensions into a QROPS, which stands for a Qualified Recognized Overseas Pension Scheme (QROPS). You can combine all of your pensions into a single plan using QROPS. Because of this, you will have an easier time managing your retirement money and will be able to avoid currency swings.
The QROPS program has a lot of positive aspects. On the other hand, not all retirees in the UK are eligible for them and not all of them have access to them. It is in your best interest to seek the guidance of an experienced financial advisor such as AES.
French pension rates and contributions
The amount of your pension that the French government will provide you is determined by three factors:
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The yearly average amount you earned (salaire annuel moyen – SAM). The standard deviation of your wages is used to calculate your social security contribution. Instead of just taking an average, the SAM model was modified in 2008 so that it would take into consideration the 25 years with the highest earnings.
Your pension rate. You are eligible to receive a maximum of 50% of your basic wage, with a lower limit of 37 and a 50% for individuals born after 1953. Your rating is determined by a percentage that is based on the number of requirements that you complete. Your pension rate, for instance, will alter according to predetermined percentages depending on whether you worked more or less than the requisite number of years.
The duration of coverage in its entirety. This normally refers to the periods during which you made contributions to a social security plan; however, other categories also count. For instance, time spent on maternity leave, in the industrial workforce, doing strenuous labor, or being unemployed could count against your French pension term (or insurance period).
Tax on pensions
Even though pensions are subject to income tax on a graduated basis, there is an annual tax-free allowance for costs of 10% of the total amount of the pension. The limit for each family was set at 3,912 euros in the year 2021. Instead of taxing individuals, households are taxed, which is beneficial for married couples in whom one partner earns much more than the other.
As was said earlier, France has agreements with many of the countries that are geographically next to it in Europe as well as with other nations all over the globe. As a result of these accords, many persons who retire to France will not be subject to double taxation.
Supplementary pensions in France
In France, residents may choose between two distinct types of supplemental pensions. To begin, there are voluntarily entered into private pension plans. Then there are pensions in the workplace that are optional. The second option is also referred to as a "business savings plan" (plan d'épargne retraite in French). The government of France supports and promotes both of these endeavors. Workers have the option of purchasing coverage with a term length of either five or ten years, and the monthly premiums may be as little as fifty euros. There are limits placed on the amount of money that may be contributed tax-free by employees and their employers, as is the case with other pensions. Contributions you make to a private voluntary pension plan may reduce your taxable income by up to 10% of your total earnings from the prior year.
There are also private pension plans that are paid for by the employer. These business pensions are often reserved for executive workers. You also have the option of purchasing your pension plans via financial institutions, pension funds, or insurance brokers.
Other pensions in France
Survivor pensions
A surviving spouse, or even an ex-spouse, may be eligible to receive more than half (54%) of the pension benefits that belonged to a dead spouse if certain circumstances are met. A surviving spouse must be at least 55 years old and have an annual income that does not exceed €21,985.60 to be eligible for this benefit (for a single person living alone).
Although there is no provision for orphaned children under the basic state pension scheme, supplementary pension plans do allow for children to claim between 30 and 50 percent of the deceased parent's pension. This is in contrast to the basic state pension scheme, which does not provide for orphaned children. The terms and conditions of each plan are different from one another.
Those under the age of 55 and with a modest income may be eligible for a widowhood allowance in certain circumstances. If this is relevant, the French pension authorities will decide.
Applying for your French pension
You are required to get in touch with the National Old-Age Insurance Fund (Caisse Nationale d'Assurance Vieillesse – CNAV) once you reach the age at which you are legally allowed to retire. If you currently reside outside of France but are eligible for a French pension, the French pension authority offers instructions on how to file for an international pension.
Useful resources
● CNAV – offers a tool that will assist you in calculating your French pension in terms of an international (in French)
● Centre for European and International Social Security Liaison – if you would want information about international accords that may affect you, go here.
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