Question to an expert
If I buy back quarters from my pension plan this year, how much will it cost me?
Retirement Insurance published a few weeks ago its price list for the redemption system for quarters in 2021: they have not changed compared to 2020. Remember that there are several redemption possibilities, the best known are the redemption of years of study and that of incomplete years, those which did not allow you to validate four terms.
The cost depends on three criteria: his age (20 to 66 years), his level of income (there are three brackets) and the option chosen (we can buy back a quarter “under the rate alone”, that is – that is to say that it will count only for the calculation of the liquidation rate of your pension, or “for the rate and the duration of insurance”: it will count for the liquidation rate and your insurance duration).
But another parameter must be taken into account: its level of taxation, because the redemption is tax deductible.
Return on investment
Take the example of Pierre, 59, earning 45,000 euros per year and wishing to buy back twelve quarters, the maximum possible, under the rate alone. Gross cost of its repurchase: 12 x 4,294 euros = 51,528 euros. With a marginal tax bracket of 41%, this cost, after tax deduction, will ultimately be 32,514 euros.
What if Martine, 54, who earns 25,000 euros per year, wishes to buy back six quarters for the rate and duration of insurance? Its repurchase will cost it 25,950 euros gross (6 x 4,325 euros). With a marginal tax bracket of 11%, this cost, after tax deduction, will be 23,380 euros.
In any case, before embarking on a quarterly (or Agirc-Arrco point) buyback operation, it is essential to assess the cost and the effect on your basic and additional pensions. To do this properly, you have to calculate the return on investment of your operation: how long will it take you to recover your initial expense thanks to the retirement differential generated?