Green light for pension reform. The Constitutional Council largely validated it on Friday. Here are the keys to understanding its impacts.
legal retirement age
62 years old, this day. Before the reform gradually raises this legal retirement age 64 years, the horizon 2030. Please note: this legal age is not synonymous with automatic retirement. It is possible to liquidate your rights later (which above all makes it possible to increase the future pension).
Some may claim early retirement (at age 60, for example): this is the case for several special schemes, but also for workers who can demonstrate a long career. With this reform, it will be necessary at least to have worked for one year before the end of December of the year of your 18 years to leave 60 years, of your 20 years to leave 62 years and of your 21 years to leave potentially 63 years.
Long career: what will change the pension reform for those who started working early
full rate age
The longer you work, the more the pension you will receive in your old age increases: this principle already exists, without waiting for the implementation of the reform. You have heard of replacement rates and pensions reaching roughly speaking three-quarters of final salary? These orders of magnitude indeed correspond to the official statistics of the DREES (1) but – nuance of importance – for the people having carried out a full career. In short, to hope for a good retirement, it is necessary to aim for the age of the full rate.
To reach this age, you must contribute a given number of quarters. Example, currently, for an employee born in 1973, 172 quarters are necessary to obtain a full pension. If your career is ever incomplete, the full rate automatically applies 67 years old. Only incapacity can make it possible to reach the full rate before having met all the required quarters.
Pension reform: how many more quarters will you have to work?
Quarter
To complete a full career, you have to validate terms. And to validate a quarter, you must receive a minimum income over 3 months. In 2023you will have to touch 1690.50 euros gross salary for the validation of a quarter (against 1585.50 euros a year earlier), this amount being revalued at the rate of the rise in the minimum wage.
Duration of insurance
This contribution period corresponds to the total valid quarters. The period of insurance is the basis for calculating your future pension. The required period of insurance is the period necessary to reach the full rate.
year of birth | Legal starting age | Before the reform | After the reform |
---|---|---|---|
1960 | 62 years old | 167 quarters | 167 quarters 41 years, 9 months |
January 1961 August 1961 | 62 years old | 168 quarters | 168 quarters 42 years old |
September 1961 december 1961 | 62 years and 3 months | 168 quarters 42 years old | 169 quarters 42 years, 3 months |
1962 | 62 years and 6 months | 168 quarters 42 years old | 169 quarters 42 years, 3 months |
1963 | 62 years and 9 months | 168 quarters 42 years old | 170 quarters 42 years, 6 months |
1964 | 63 years old | 169 quarters 42 years and 3 months | 171 quarters 42 years, 9 months |
1965 | 63 years and 3 months | 169 quarters 42 years and 3 months | 172 quarters |
1966 | 63 years and 6 months | 169 quarters 42 years and 3 months | 172 quarters 43 years |
1967 | 63 years and 9 months | 170 quarters 42 years and 6 months | 172 quarters 43 years |
1968 | 64 years old | 170 quarters 42 years and 6 months | 172 quarters 43 years |
1969 | 64 years old | 170 quarters 42 years and 6 months | 172 quarters 43 years |
1970 | 64 years old | 171 quarters 42 years and 9 months | 172 quarters 43 years |
1971 | 64 years old | 171 quarters 42 years and 9 months | 172 quarters 43 years |
1972 | 64 years old | 171 quarters 42 years and 9 months | 172 quarters 43 years |
1973 | 64 years old | 172 quarters 43 years | 172 quarters 43 years |
Source: Matignon
To reach this required duration more quickly, you can buy back non-validated terms (due to studies, insufficient contributions, work abroad, etc.). This therefore makes it possible to improve your pension, or to retire earlier (bringing you closer to the full rate more quickly)… or both.
Retirement: buying back quarters, is it useful and how much?
Discount
When you liquidate your pension rights before reaching full pension age, we are talking about a discount. Schematically, the rate applied to your annual income used to calculate your retirement will be lower… and therefore your pension will be lower.
Retirement: a subtlety to receive the full automatic rate of your pension at age 67
Surcharge
On the other hand, if you continue to work afterwards having passed the age of the full rate, a surcharge (definitive increase) increases the amount of your pension, explains Info-Retraite: It depends on the number of additional quarters worked. Once again, it all depends on the age at which you can reach your full rate, which is currently between 62 and 67 years old. And term between 64 and 67 following the reform (except for long careers).
Basic pension
The counting of the quarters concerns above all the basic pension. Except for former civil servants, most of whose pension is a basic pension, the pension of private sector employees is divided into two separate parts: a basic pension + a supplementary one.
There National old-age insurance fund (Cnav) manages the general plan for nearly 15 million withdrawals. The SRE (State Pensions Service) and the CNRACL (National Fund for Local Authority Agents) manage the basic pension of former civil servants, the CNAVPL that of liberals.
According to statistics provided by Agirc-Arrco, the average pension (excluding survivor’s pension following the death of the spouse), of 1474 euros in 2020, includes 732 euros of basic pension, 491 euros paid each month by Agirc-Arrco and 251 euros paid by other schemes for withdrawals having contributed to different schemes during their career.
Agirc-Arrco point (and points for the various supplementary schemes)
The Agirc-Arrco supplementary scheme, that of private sector employees, is the one that concerns the most people, with 13 million withdrawals at present, but the principle of the point is the same for all the supplementary schemes: you contribute throughout of your career and accumulate points.
Then these points have a value directly convertible into euros. Warning: the value can potentially vary up or down! There Agirc-Arrco point value is currently 1.3498 euro. For 1000 points accumulated, you are entitled to approximately 1350euros gross annual pension.
Is the complementary totally disconnected from the reform? No, because there is also a discount if you do not reach the full rate age. If the period of insurance required for the full rate changes for your generation, the supplementary is indirectly affected by the reform.
In addition, a temporary penalty of 10% applies to the supplementary when you leave just at the age of the full rate: at this stage, the Agirc-Arrco scheme has not yet decided on the maintenance of this mechanism to encourage working longer , once the reform is in force, in September 2023.
Agirc-Arrco supplementary pension: will the 10% discount still apply after the reform?
Minimum old age
Solidarity allowance for the elderly (ASPA), or minimum old age, climbs 961.08 euros per month for a single withdrawal in 2023. Paid by your pension fund, this allowance is part of the social minima like the RSA.
Minimum pension
The promise (largely horn) of a minimum pension of 1200 euros? It rests on the contributory minimum, not to be confused with the minimum old age! This minimum pension (currently 684 euros, or even 748 euros in the event of an increase) concerns only withdrawals that have reached the full rate age (and not the legal age). Without a full rate, the minimum is lower… And this minimum pension from the basic scheme is added to the supplementary one.
Important clarification: the monthly pension of 1,200 euros promised by the government for full careers means basic pension + additional and gross.
Pension reform: what will change for small pensions
(1) Department of Research, Evaluation Studies and Statistics.