EXPLAINED: How your French pension works
If you're working in France you will see a chunk of money diverted from your income every month towards a pension - but how does the French pension system work and what do you need to do to ensure that you get your money when you retire?
If you work in France, it's a good idea to have at least a basic understanding of how the - typically complicated - French pensions system works. This is especially true if, like many readers of The Local, you’ve previously worked and contributed to a pension in other countries.
Emmanuel Macron is trying to reform the French pension system, declaring it too complex and labyrinthine. After writing this guide, we're inclined to agree to with him.
Here's how the system works at present.
The basics
There are three pillars to the French pension system: state pension, compulsory supplementary pension, and voluntary private pensions. All employees and their companies contribute to two of them. The third is a personal additional choice.
State Pension
Anyone in employment in France is obliged to be enrolled in a pension scheme.
The régime de base is the basic state pension and the amount to which you are entitled is based on how long you have paid into the system.
This is divided into trimestres (quarters). There are, obviously, four quarters in a year. A 40-year working career earns 160 trimestres towards your state pension.
The actual amount you receive depends on average annual income, calculated using the best 25 years of your earning career. But to qualify for a full pension, you need to work longer.
How many trimestres you need to retire on a full state pension depends on the year you were born. Those born between 1961 and 1963 - who are now looking forward to retirement - need 168 trimestres, or 42 years. Those born in 1973 or after currently need 172 trimestres, or 43 years.
Periods of unemployment, maternity leave or absence because of long-term illness or accidents at work are taken into account. These credits count towards determining your total number of trimestres.
READ ALSO How long do I have to work to qualify for a French pension?
Compulsory supplementary pension
AKA - the régime complémentaire. This pension, received alongside the basic pension, is calculated on the contributions paid by an employee during the course of their career.
As the name suggests, paying into this scheme - like the basic State pension - is compulsory. You don’t get to choose which compulsory pension scheme you join, there are national schemes for different jobs and the one you pay into depends on the job you do. This pension is based on your average payments across your working career - not just on the best 25 years.
Not only the employee but the employer contributes towards your pension - something to keep in mind if you intend to hire staff. Pension contributions made by the employee and the employer should be clearly identified on payslips.
READ ALSO How to understand your French payslip
Non-French pensions
Periods of employment outside France may be combined with years worked in France to boost or qualify for French basic and supplementary pensions.
Working in EU/EEA countries, and Switzerland can count to a French pension. Other countries - listed here - also have social security agreements with France that will allow you to combine work periods.
If you're British and you lived in France before December 31st 2020 (ie if you're covered by the Withdrawal Agreement) your pension is calculated in the same way as for EU/EEA countries.
A few countries - listed here - have agreements with France for self-employed workers.
READ ALSO Brits in France: What you need to know about your pension
Voluntary private pension
This speaks for itself. You can, if you wish and if you can, pay into a private pension plan.
READ ALSO Ask the expert: How to avoid pension scams when you retire to France
These are less common in France than in some other countries, because the state and complementary pensions are relatively generous. There's also a legal minimum that pensioners can receive - regularly revised and pegged to the minimum wave - although not all foreigners are entitled to this if they haven't worked in France for the qualifying period.
Taking advice from a financial adviser is always recommended before investing in financial products.
Overseas pension
If you have retired to France you can of course still claim your pension from the country you were working in. In most cases this will be paid in the currency of your home country, so if isn't the euro bear in mind that fluctuations in exchange rates will affect how much money you get each month.
And if you're Australian beware the 'pensions trap' resulting from the lack of an international social security agreement - full details here.
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If you work in France, it's a good idea to have at least a basic understanding of how the - typically complicated - French pensions system works. This is especially true if, like many readers of The Local, you’ve previously worked and contributed to a pension in other countries.
Emmanuel Macron is trying to reform the French pension system, declaring it too complex and labyrinthine. After writing this guide, we're inclined to agree to with him.
Here's how the system works at present.
The basics
There are three pillars to the French pension system: state pension, compulsory supplementary pension, and voluntary private pensions. All employees and their companies contribute to two of them. The third is a personal additional choice.
State Pension
Anyone in employment in France is obliged to be enrolled in a pension scheme.
The régime de base is the basic state pension and the amount to which you are entitled is based on how long you have paid into the system.
This is divided into trimestres (quarters). There are, obviously, four quarters in a year. A 40-year working career earns 160 trimestres towards your state pension.
The actual amount you receive depends on average annual income, calculated using the best 25 years of your earning career. But to qualify for a full pension, you need to work longer.
How many trimestres you need to retire on a full state pension depends on the year you were born. Those born between 1961 and 1963 - who are now looking forward to retirement - need 168 trimestres, or 42 years. Those born in 1973 or after currently need 172 trimestres, or 43 years.
Periods of unemployment, maternity leave or absence because of long-term illness or accidents at work are taken into account. These credits count towards determining your total number of trimestres.
READ ALSO How long do I have to work to qualify for a French pension?
Compulsory supplementary pension
AKA - the régime complémentaire. This pension, received alongside the basic pension, is calculated on the contributions paid by an employee during the course of their career.
As the name suggests, paying into this scheme - like the basic State pension - is compulsory. You don’t get to choose which compulsory pension scheme you join, there are national schemes for different jobs and the one you pay into depends on the job you do. This pension is based on your average payments across your working career - not just on the best 25 years.
Not only the employee but the employer contributes towards your pension - something to keep in mind if you intend to hire staff. Pension contributions made by the employee and the employer should be clearly identified on payslips.
READ ALSO How to understand your French payslip
Non-French pensions
Periods of employment outside France may be combined with years worked in France to boost or qualify for French basic and supplementary pensions.
Working in EU/EEA countries, and Switzerland can count to a French pension. Other countries - listed here - also have social security agreements with France that will allow you to combine work periods.
If you're British and you lived in France before December 31st 2020 (ie if you're covered by the Withdrawal Agreement) your pension is calculated in the same way as for EU/EEA countries.
A few countries - listed here - have agreements with France for self-employed workers.
READ ALSO Brits in France: What you need to know about your pension
Voluntary private pension
This speaks for itself. You can, if you wish and if you can, pay into a private pension plan.
READ ALSO Ask the expert: How to avoid pension scams when you retire to France
These are less common in France than in some other countries, because the state and complementary pensions are relatively generous. There's also a legal minimum that pensioners can receive - regularly revised and pegged to the minimum wave - although not all foreigners are entitled to this if they haven't worked in France for the qualifying period.
Taking advice from a financial adviser is always recommended before investing in financial products.
Overseas pension
If you have retired to France you can of course still claim your pension from the country you were working in. In most cases this will be paid in the currency of your home country, so if isn't the euro bear in mind that fluctuations in exchange rates will affect how much money you get each month.
And if you're Australian beware the 'pensions trap' resulting from the lack of an international social security agreement - full details here.
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