A minimum pension of 1200 euros? The government’s initial promise has already been largely scratched: it will be in gross, complementary included, only for those who have reached the age of the full rate… Nevertheless: 1.8 million current withdrawals will see their small pension increase thanks to this reform according to the government. But by how much?
1200 euros? Yes, but rough and not for everyone. What about current withdrawals? Mrs observation. No, small pensions will not all be brought to 1,200 euros gross at once. On the other hand According to the government, 1.8 million withdrawals currently affecting a small pension are affected by the future boost to the contributory minimum. A measure which will go through a decree but whose outlines are already quite precise. At best: 100 euros more per month, but…
Small pension: will you be able to take advantage of the minimum pension of 1200 euros?
Who already benefits from the minimum contribution?
Does the minimum retirement or minimum pension exist? Yes, in part… The contributory minimum (MiCo) brings back your basic pension (retirement insurance, or Cnav, most often) to a minimum level, of 684.13 euros gross currently, provided however that you have reached the age of the full rate. To do this, you must therefore not only have reached the legal age (now 62 years old) but also have contributed the number of quarters required according to your year of birth and which include any quarters for maternity, disability, sick leave, military service, etc.
If you left before reaching the full rate, this minimum is prorated according to the number of quarters you have validated: therefore less than 684 euros.
| Amount | Condition | |
|---|---|---|
| Contributory minimum (MiCo) | 684 Basic pension | Full rate |
| MiCo major | 748 Basic pension | 120 quarters contributions |
| Ceiling MiCo | 1323 Basic + complementary | Limits the MiCo if repos of basic + complementary exceed the ceiling |
| Number of beneficiaries | 4.7million withdrawals (33% direct withdrawals from the general scheme) | |
Rounded amounts, as of January 1, 2023. Sources: legislation + Cnav (statistics at the end of 2022)
Added to this minimum for the basic pension is an increase, currently bringing the minimum 747.57 euros per month, gross, before any CSG-CRDS. This increase is also pro rata, but this time according to the quarters contributed, therefore really worked, a nuance of importance which this time ludes the quarters of invalidity, illness, etc. If your basic pension is low, below the thresholds above, and you have a full career, this mechanism brings your basic pension back to the level of the contributory minimum, or increased minimum.
The withdrawals concerned have already clearly identified the increase line under the minimum contributory” which appears on their certificate of payment, says Claude Wagner, pension specialist at the CFDT. End of 2022, 4.7million withdrawals benefit from the MiCo according to the Cnav.
The contributory minimum should not be confused with the minimum old age (now Aspa, Solidarity allowance for the elderly), to date almost 600,000 elderly people. This minimum old age is part of the social minima, like the RSA, and is 961 euros maximum per year. Assistance that supplements your resources to reach this amount, or potentially up to 1,492 euros for a couple.
Contributory minimum: example for an ax career
Dominique worked all her career at Smic, until leaving the labor market at 50 for disability. As three economists from the Institute for Public Policy explain (1), invalidity status allows this person to accumulate quarters of insurance and to leave at the full rate at the legal retirement age. But most of her quarters of disability do not count as quarters contributed: she benefits from the MiCo but not from the MiCo major. Without this system, Dominique’s theoretical retirement pension is less than 400 euros: it is carries 684 euros thanks to the MiCo (excluding increase). Add the complementary Agirc-Arrco, for a combined pension of 871 euros according to PPI calculations.
Note: depending on the composition of the household and any other resources, Dominique can potentially also benefit from the minimum old age.
Example from PPI analysis (1).
Pension reform 2023: what increases in the minimum contributory?
The revaluation of the minimum contribution is not exactly the same for future withdrawals and for current withdrawals.
Future withdrawals. For retirements from September 2023, the MiCo will be increased by 25 euros, 709 euros, and the MiCo premium by 75 euros. These increases were cumulative, the MiCo major will be in the best case of 848 euros, or 100 euros better than present.
| Amount | Condition | |
|---|---|---|
| Contributory minimum (MiCo) | 709 Basic pension | Full rate |
| MiCo major | 848 Basic pension | 120 quarters contributions |
| Ceiling MiCo | 1323 Basic + complementary | Limits the MiCo if the basic + supplementary pensions exceed the ceiling |
Sources: Report on the objectives and effects of the pension reform project + Ministry of Labour.
Current withdrawals. No revaluation of the simple contributory minimum, excluding the increase, in their case, as MoneyVox specified by the Minister of Labor: For current withdrawals, we only target those who have 120 quarters contributedwith a maximum revaluation of 100 euros of the MiCo major.
| Amount | |
|---|---|
| Contributory minimum (MiCo) | + 0 on your basic pension |
| MiCo major | + 1,100 on your basic pension |
| Beneficiaries of the revaluation of the MiCo major | 1.8million withdrawals |
Source: Report on the objectives and effects of the pension reform project, January 2023.
Example before/after the reform for a career at minimum wage, full time
Thierry is retiring in 2023. He has spent his entire career at minimum wage, without interruption. Without the reform, he will not see his basic pension raised by the MiCo, which reaches 781 euros gross (the MiCo plus being 748 euros), details the government in its impact study. Or 1103 euros with additional (781 euros + 322 euros), before social security contributions.
A typical case of the government for this measure, he fully benefits from the revaluation of the major MiCo: previously below the threshold of the major MiCo, the transition to 848 euros saves him 82 euros and his overall pension reaches 1185 euros, gross, as illustrated by the IPP:
Who will really earn 100euros more on their basic pension?
As the example above illustrates, even the typical example of an employee retiring in 2023 with a career at Smic does not benefit from a bonus of 100 euros. But slightly less. For future withdrawals, the maximum gain of 100 euros will benefit less than 10% of new withdrawals, according to the calculations of the PPI.
What about current withdrawals? A majority of people already retired beneficiaries of the minimum contributory would not be affected by the revaluation, explains the IPP. For what? Because three-quarters of the beneficiaries of a minimum for their main scheme have a contribution period of less than 30 years [les fameux 120 trimestres cotiss ncessaires pour profiter du MiCo major, NDLR] and would therefore not be entitled to revaluation of the minimum contribution [major], detail the economists of the IPP, who specify however that the measure will benefit certain withdrawals with a small pension without benefiting from the MiCo. However, the number of these new beneficiaries is more difficult to estimate.
What is the average increase for current withdrawals?
The government announces 1.8 million winners, for an average improvement of 680 euros in their annual pension, i.e. about 57euros per month more, on the basic pension, gross. An increase of 6% on average for the 700,000 men and 1.1 million women concerned. For men, the average gain per month would be almost 45 euros per month and, for the women concerned, approximately 63 euros per month, on the basis of the figures provided in the impact study.
What upside if you have an axed career?
Zero. At this stage, the example detailed above for Dominique – full rate withdrawal but without his 120 quarters of contributions due to disability at age 50 will not benefit from the revaluation of the MiCo. At least if he is already retired. This is the result of the difference between future and current withdrawals, as confirmed by the Minister of Labor: for current withdrawals, the simple MiCo does not move, only the major MiCo.
SO, no revaluation if you do not have 30 years of contribution (actual work). But Claude Wagner, of the CFDT-Retraits, recalls that 17% of new withdrawals are retiring for incapacity.
Part-time workers will see their pension increase, but will not reach 1200 euros
What increase for a career at half-time Smic?
Part-time workers will see their pension increase, but will not reach 1200 euros, explain the economists of the IPP (1). They take the example of a full career at Smic but part-time: sufficient to validate the criteria for access to MiCo and MiCo major. The person benefits fully from the increase of 100 euros since they have the maximum contribution period, explains Maxime T, of the IPP. Result: the basic pension increases from 748 to 848 euros, which corresponds to the maximum of the MiCo major. But in this example of the PPI its lower contributions to the supplementary private scheme (Agirc-Arrco) only allow it to reach 1015euros gross after the reform, against 915euros previously.
What impact on your supplementary pension?
Nothing, this stadium. The state has no control over supplementary schemes. The largest, that of private sector employees, Agirc-Arrco, is co-managed by employee unions and employers’ organisations. However, solicited by MoneyVox, Agirc-Arrco considers 255 euros gross there monthly supplement of a person born in 1961, having started working 20 years ago, having known a full career paid at minimum wage, and having liquidated his retirement on January 1, 2023. Admittedly, the Agirc-Arrco penalty encroaches on this average of 10%, but even without penalty, this average remains far from the more than 300 euros cited as an example by the government to allow approaching the promise of 1,200 euros for a full career at Smic. In gross.
(1) Institute of Public Policies (IPP), Beyond 1200 euros: what prospects for reform for small pensions?, Patrick Abert, Carole Bonnet and Maxime T.