Retirement, rents, booklet A, APL, CAF … The winners and losers of more than 5% inflation

The government has promised to index the scale of income tax to inflation…as tradition dictates. Like taxes or the minimum wage, the rise in prices activates a multitude of more or less automatic revaluations. For what impact? Overview of quantified increases to anticipate.

Inflation now exceeds 5% and this surge in consumer prices is becoming a major political issue. It is impossible, in this week between the two rounds of the legislative elections, to know precisely what the responses of the future parliamentary majority will be. Obviously, the price freeze demanded by NUPES or the food voucher announced by the current government are very different responses to inflation. The most probable scenario in view of the forecasts of the polling institutes remains the maintenance of the presidential majority. With the promise of a purchasing power bill finally expected in early July on the table of the Council of Ministers. This text must carry two exceptional revaluations: for pensions and social benefits. Without waiting for the results of the elections or the details of this bill, an overview of the expenses and resources that will increase in the face of inflation in the coming months.

Smic: a new automatic increase if…

The perfect counterexample. While all the resources supposed to be indexed to inflation are slow to keep pace with the rise in prices, the minimum wage has really increased. Because in addition to the traditional January revaluation, the calculation formula provides for an exceptional increase if prices rise by more than 2% in a few months. Thus, the net minimum wage rose in one year from 1,230.60 euros to 1,302.64 euros net, by strict application of this rule. For the formula to engage again, the inflation suffered by the 20% of the poorest French households would have to exceed 7%.

Retirement: +4% this summer, but…

I confirm a revaluation of 4% for all pensions, declared the Prime Minister Elisabeth Borne at the microphone of France Blue. This increase will go through the purchasing power bill, which will accelerate the usual schedule of revaluations in order to stick to inflation, and will be visible on pensions paid in early August.

Retirement: what will be the new amount of your pension thanks to the revaluation of July?

This exceptional increase would be added to that of 1.1% in January 2022. Why was it so weak? Because it was based on the average inflation (1) from November 2020 to October 2021. If the withdrawals were to wait until January 2023, the view of the estimates, the increase would exceed 4.3% according to our calculations. And applying this formula to the letter today, it would be 3%. The 4% increase promised by Elisabeth Borne is therefore more generous than that provided for by law.

This exceptional increase will clearly limit the loss of purchasing power of withdrawals, judges the OFCE in its study, but… it will not make it possible to fully compensate for these losses for all withdrawals, explains Pierre Madec, economist of the ‘OFCE.

Because be careful: this 4% only relates to the basic pension, not to the supplementary schemes over which the State has no control (read below). Thus, for a withdrawal from the private sector having contributed to Agirc-Arrco affecting the average pension of 1474 euros, the summer increase of 4% will be 39 euros and not 59 euros, because a third of the total pension depends on the complementary Agirc-Arrco.

Activity bonus, the minimum old age, RSA…: +4% too?

In normal times, social benefits progress at almost the same rate as the basic pension. Because the calculation formula (1) is the same, the only difference being the calendar of annual increases: in the spring for the RSA and others.

The last increase dating from April 2022 (+1.8%, the fault of a formula based on the average of the last twelve months), it will in theory be necessary to wait until the spring of 2023 for the social minima to finally increase at the rate of inflation. !

This is why the government has announced that they will also be upgraded from this summer, like pensions, without waiting for the usual schedule. At 4% again, as the daily advances The echoes? Contacted by MoneyVox, the cabinet of Bruno Le Maire specifies however that the percentage of revaluation has not been announced: it will be necessary to wait for the bill to know the percentage of revaluation. By applying to date the calculation formula presented in the Social Security Code, the increase would be, according to our calculations, 3%.

If the government confirmed an exceptional increase of 4%, it would make it possible to compensate for the loss of purchasing power of the low-income households concerned, judge Pierre Madec, of the OFCE. Because it would be added to a recent increase of 1.8%, which would make +5.8% in a few months.

APL: +3.5%, only, in October 2022…

Unless there is a surprise announcement, the revaluation of housing allowances will wait until the fall, following its usual rhythm. And this even if the last revaluation was only 0.42% in October 2021. IRL (rental reference index) for the 2nd quarter of 2022.

The latter will be published by INSEE on 13 July. It is already possible to estimate its evolution, since it is calculated on the basis of the consumer price index (CPI) excluding rents and excluding tobacco for the last twelve months. Verdict? 3.5%, maybe slightly more.

LEP, Livret A, PEL… rates doubled this summer?

In a completely different category of income, the interests of the savings books also depend in part on inflation. In short: the Livret d’epargne populaire (LEP) should climb 4.5% in August, the Livret A potentially 1.5% or even 2%. Even the Housing Savings Plan, whose remuneration depends on a completely different formula, could see its rate go up this summer.

Livret A 2%, LEP 4.5%: the theoretical rates for your savings from August 1st

Income tax: index scale… to avoid a tax increase

The impact of inflation on taxes is more indirect. Dj, let’s avoid misunderstandings: the 2022 tax scale (on 2021 income) is known and will not change. Most of you already know the balance to be paid at the end of the summer and the overpayment that will be refunded to you in the middle of the summer.

Taxes: how to decipher the end-of-declaration puzzle calculation

The question of the revaluation of the scale will only really arise during the debate on the finance law for 2023, next fall. But the beginning of a controversy surfaced… before Bruno Le Maire dotted the i’s: like every year, the scale will be indexed to inflation. Since 1969, with the exception of the freeze in 2012 and 2013, it has been systematically reassessed according to the rise in the cost of living.

It remains to determine the indexation rate… Last year, the government was content with a 1.4% increase based on the figures known at the end of summer 2021, when inflation had clearly accelerated at the end of the year… An absence of reaction rather unfavorable to taxpayers.

These increases which remain uncertain

Some expenses or resources evolve at the rate of inflation… but only in part. Which on the one hand makes any anticipation impossible, and which can turn out to be unfavourable.

Unemployment benefits. See you on July 1. It is on this date that Undic traditionally increases the minimum unemployment benefit and, by extension, all compensation for employment. Last year, this revaluation affecting 2.4 million job seekers was limited to 0.6%… And this year? The decision goes through a vote of the administrators of Undic, the social partners managing the scheme (representatives of employers and employees). In short: a revaluation decides with regard to inflation… without being indexed. Suspense.

Complementary pension. The principle is similar to that of the unemployment benefit: the revaluation is decided by the board of directors of the supplementary scheme. And there are many complementary ones. For example, the Agirc-Arrco scheme has a margin of 0.5 points (up or down) compared to the forecast rate of inflation for the current year, expected close to 5%, for the traditional revaluation annually from November 1.

Property tax. This local tax will increase by a minimum of 3.4% in 2022. Because the basis of the calculation, the cadastral rental value, increases at the rate of the harmonized consumer price index (HICP). But your 2022 property tax depends above all on the rates voted in your city, intermunicipality or department: according to a study by the FSL firm published in May, 29% of cities and groups of municipalities are increasing their rates this year, the highest score since 2016. average of 1.9% is expected, or more than 5% with the increase in the cadastral rental value.

(1) Formula detailed in Article L161-25 of the Social Security Code.