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Pension plans in Paris


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Pensions are a fund paid regularly to a person, typically following a retirement from service. Most pensions are part of the Basic plan (State plan) and Supplementary funds.

State Pension Plan

The general pension, Retraite De Base, is managed by Caisse Nationale d'Assurance Vieillesse (CNAV, The National Retirement Fund of Public Social Security).

Age of Eligibility

The legal minimum retirement age is 60 for persons born before lst July 1951, and 62 for persons born after lst January 1955. This is increasing by 4 months each year for persons born between July lst, 1951 and December 31st, 1951.

Eligibility is also based on contributions. A pensioner must have contributed for at least 160 to 166 trimestres (depending on year of birth).

Reduced Rate Pension
People may draw their pension before reaching the pension age and without the qualifying period of insurance for a full pension, but at a reduced rate. This is determined according to the age at which the person retires or the number of quarters of insurance completed. The reduction is 1.625% for persons born in 1950, 1.5% for persons born in 1951, 1.375% for those born in 1952 and 1.25% for those born after 1952.

Increased Pension Rate
Workers may claim their pension later for increased pension. They must work after the legal minimum retirement age and pay contributions for longer than the qualifying period for a full pension (depending on the year of birth). For quarters completed after lst January 2009, the rate of increase is 1.25% for each additional quarter.

Contributions

Contributions are levied on employees pay. Approximately 6.65 percent is paid by the employee and 8.3 percent is paid by the employee.

Benefits

To calculate your benefit, there are three factors:
Basic salary or Average Annual Earnings (SAM) - average annual earnings are the adjusted earnings on which contributions have been paid. This is based on the 25 best years for all individuals born after 1947.
Payment rate - 50 percent for full rate
Total period of insurance - Effective period of insurance (contribution periods and periods treated as such) under the insurance scheme.

The amount of the pension plus the supplementary solidarity allowance is at least
777,16 € per month for a single person
1206,59 € per month for a couple

Supplementary Pension Plan

Supplementary pensions (Retraite Complémentaire) are compulsory for all employees subject to statutory old-age insurance. These funds are organized by AGIRC (general association of pension institutions for managerial staff) or ARRCO (association for the supplementary retirement scheme for non-managerial staff).

Calculation

The calculation of supplementary retirement pensions is points-based. Credit points are credited for employment periods prior to the implementation of the scheme and for periods of illness of at least three consecutive months (scheme for managerial and executive staff) or 60 consecutive days (scheme for non-executive staff). At retirement, the accumulated points are converted into euros by multiplying them by the value of each point. The pension is proportional to earnings over the total period of insurance, rather than the 25 best years as applicable in the basic scheme.

    The annual values of ARCCO and AGIRC points:
  • ARRCO : 1.2414 €
  • AGIRC : 0.4330 €

Age of Eligibility

The legal minimum retirement age is 60 for persons born before lst July 1951, and 62 for persons born after lst January 1955. This is increasing by 4 months each year for persons born between July lst, 1951 and December 31st, 1951.

Self Employed Pension Plan

The self-employed (Profession Libérales) pension is managed by the Caisse nationale d'assurance vieillesse des professions libérales (CNAVPL). It is based on points system like the Arrco/Agric system.

Artisans & Commerçants are similar to the régime de base, but managed by the Régime Social des Indépendants (RSI).

Private Pension Plans

There are a variety of private plans available for those interested in additional pension coverage.

Plan d'Epargne Retraite Populaire

A major private pension plan is the Plan d'Epargne Retraite Populaire (PERP). Contributions can be as low as €50 per month. The benefit is determined by contributions. In addition, the plan offers an income tax credit for payments (up to 10% of their revenues from professional activity the year before - after deducting 10% for professional fees).

Payments made into PERP are locked until retirement. At that point, the investment fund purchases an annuity. This is subject to the terms of the contract. The only circumstances in which money can be taken out of the PERP before retirement is if the investor's business activity is ceased due to a liquidation judgment or if they contract an illness/disability that makes it impossible to exercise their profession. In some cases it is possible to recover some or all of the PERP in the case of divorce, or the death or incapacity of a spouse.

Assurance Vie

An Assurance Vie contract allows for monthly contributions and low cost withdrawals. It is not required to buy an annuity and funds do not need to be held until retirement age (this is very popular in France as a form of saving with better interest rates). However, the premiums invested do not receive income tax credit.

Gains are liable to social charges of 12.1 percent when they are withdrawn, plus taxation on a sliding scale depending on how long the policy has been in force:

  • 35 percent for a policy less than 4 years old
  • 15 percent for policies between 4 & 8 years old and
  • 7.5 percent for all policies over 8 years old

Collective Plans

Collective pension plans (plan d'épargne pour la retraite collectif) are company plans that allow employees to contribute and receive tax credits. Multiple sources of funds may be used to contribute:

  • Bonuses
  • Profit sharing
  • Voluntary payments (up to 25% of total gross earnings)
  • Company contributions (up to 16% of the social security limit which is €35,000)
  • Transfers from other company savings schemes

At retirement, benefits are not taxable. However, the annuities are taxable as income. Consult with your company for options.

Expats and claiming pension benefits from abroad

Collecting a minimum French state pension is possible for expats who

  • Have been permanent residents of France for at least six months of the new tax year (which runs from April until April)
  • Registered for income tax
  • Over the age of 65 (in some cases where the person is officially incapable of work after age 60.)
  • Income of no more than €777.65 a month for a single person or €1237.31 a month for a couple

EU Nationals

Periods of work abroad can complicate contributions and benefits for a pension plan. A claim for any EEA state pensions should be made via the state pension service of the last country of employment, where social security contributions were paid. The European Union/European Economic Area is working to harmonize the various agreements so expats working in different sectors are provided for in retirement.

If you have worked in several EU countries, you will have accumulated pension rights in each country. When the time comes for you to claim your old-age pension, you normally have to apply in the country where you are living or in the country where you last worked. That country is then responsible for processing your claim and bringing together records of your pension contributions from all the countries you have worked in.

If a retiree is entitled to state pensions from more than one EEA country, the combined pension entitlements will be calculated according to national and EU community rules. This is done by:

  • Each country working out how much State Pension you can get from what you have paid into its own social security scheme or
  • Each country adds together insurance in all countries. Then each one sees how much State Pension you would get if your insurance had all been paid into its own social security scheme with each country paying the same percentage paid into its scheme.

For example, if you paid one-third social insurance in the UK, then the UK would pay one-third of the total State Pension you are entitled to. The other countries you have contributed to would pay a similarly representational portion.

Other nations may also have a reciprocal agreement with France. Consult with the administrators of your state or private pension plan before moving abroad.

EU retirees over 60 going to live permanently in France aren't required to contribute to French social security, but must register with their local French Health Service (Caisse Primaire Assurance Maladie or CPAM). Here you should present:

  • Copy of your carte de séjour/résident or your temporary authorization (récépissé de demande de carte de séjour)
  • Proof of your relationship with any dependents who don't qualify in their own right (e.g. a marriage certificate)
  • Bank account details (relevé d'identite bancaire)

If you're receiving a state pension in another EU country, you may be subject to an annual check that you're still receiving it. EU citizens who retire before qualifying for a state pension can receive French social security health cover for up to 30 months by obtaining a form E106 from their country's social security department. Applicants must have made full contributions in your home country during the last two years. If you're of retirement age but are still working, you may qualify for an E106 and obtain health benefits for up to 30 months.

How to make a ASPA Claim

The ASPA is mainly managed by CNAV. Claims are made through their office.
Address: 110-112 rue de Flandres
75951 Paris cedex 19
Tel: 0033 1 40 05 51 10

To claim the pension you should start the process at least one year before the pension day. The ASPA should contact you automatically within 4 months of the date you may claim your pension, but you may contact them and request the paperwork before hand.

Update 13/02/2013


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