MONEYVOX INFO. Are you one of the future withdrawals having bought back quarters a little too quickly? And these retirement payments ultimately prove useless because of the increase in the legal retirement age? The reform opens the way to reimbursement… The precise terms and conditions were missing. The long-awaited circular will be published in the coming days. What there is to know.
1 – Who has been the victim of unnecessary buyouts?
Let’s take the example of Philippe, a reader of MoneyVox, who was afraid for his 12 quarters bought back in mid-January, a few days after the presentation of the pension reform: Born in 1966, I had to retire at 65 to have the full rate. I bought 12 terms of higher studies for 75,000 euros in order to be able to leave at 62. Did I lose this money?
Pension reform: I bought back 12 quarters to leave at age 62. Are they lost?
Like Philippe, all future withdrawals who have made retirement payments in order to advance their departure can consider themselves weary… before realizing that the increase in the legal age made these redemptions useless. Indeed, the image of Philippe, despite the buyouts, impossible to leave before the legal age (except for a long career), carries 63 years and 6 months in the case of Philippe, born in 1966. To simplify, half of his redemptions are useless.
Good news: if nothing was planned for this scenario in January, the law on pension reform opens the way to reimbursement of these unnecessary redemptions.
2 – What the law says
The Social Security amending financing law carrying the reform contains, article 10, a measure allowing you to claim a reimbursement of this redemption of quarters carried out for nothing (apart from the tax advantage obtained in the year of redemption) .
Since then, a decree relaxing the conditions for buying back quarters has been published. But, for reimbursements of quarters repurchased unnecessarily, a circular from the National Old Age Insurance Fund (CNAV) is missing. This circular is currently in the finalization phase on the Cnav side. MoneyVox had access to the main passages of the draft circular.
3 – Who will have the right to request a refund?
First condition to be able to claim a refund, without any surprises: be concerned by the reform and by the increase in the departure age. SO be born after September 1, 1961.
In short: if you bought back quarters, and you regret it, but you were born before September 1961, this reimbursement does not concern you.
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Second condition for having the right to claim a refund: not having already exercised your retirement rights.
4 – Which redemptions are eligible for reimbursement?
Only redemptions made before April 14, 2023, according to the draft Cnav circular. The date of April 14 corresponds to the validation of the reform by the Constitutional Council, the law having been published the following day at Official newspaper.
The date of payment of the redemption is decisive. Therefore, a redemption requested before April 14 but paid after will not be eligible for reimbursement. Only the country redemptions BEFORE April 14 will be refundable. With one exception: redemptions paid in several scheduled installments, provided that the first scheduled payment was made before April 14.
5 – When should you submit your reimbursement request?
You have 2 years following the promulgation of the pension reform to claim this reimbursement from Retirement Insurance. Reimbursement requests submitted between April 14, 2023 and April 14, 2025 inclusive will be admissible.
Tax puzzle
Like the reimbursements of quarters bought back unnecessarily 10 years ago, following the 2010 pension reform, these reimbursements will lead to a complex tax mechanism. Since these unnecessary redemptions still offered you a deduction from taxable income. The reimbursement will be mechanically taxed.
Retirement: buying back quarters, is it useful and how much does it cost?