Basic pensions increased by 4% in September, and the pension paid in September was even boosted to compensate for the shortfall in the summer. Now all eyes are on complementary companies and in particular Agirc-Arrco. What increase can we anticipate for November? Will the revaluation be up to inflation, after years of lean cows?
1%, 1.1%, 4%… For the past year, it’s better to have an arithmetic mind to keep up with the rate of pension increases. Let us rewind, for the more than 13 million withdrawals dependent on the supplementary private scheme, Agirc-Arrco: to November 1, 2021the supplementary pension increased by 1%. Yes 1% only. While inflation was already climbing to 2.8%, and the forecast inflation rate provided by INSEE was then 1.5%.
A year ago, Agirc-Arrco therefore assumed a revaluation lower than inflation. Then the CNAV raised the basic pensions of 1.1% as of January 1, 2022, in accordance with a complex calculation formula that is not very responsive to sudden increases. This summer, withdrawals could legitimately claim to be among the inflation losers. Until the purchasing power law and the 4% increase in basic pensionswhich is only really visible from the September 9 for Cnav beneficiaries and which will come into effect on September 29 for former civil servants. An increase valid on basic pensions only…
Retirement: by how much should your pension increase in September and then this fall?
What we know… pending official announcements
From one withdrawal to another, the weight of the basic pension is more or less important: three quarters of the monthly pension for certain small pensions, less than half for others, or minimal for the majority of former civil servants .
Following the reboosted payment from the Cnav on September 9, the 13 million withdrawals from the private sector have their eyes riveted on Agirc-Arrco. At the beginning of October, the board of directors bringing together employee unions and representatives of employers will decide on the annual increase. It will be effective on the pension paid on Wednesday, November 2. How many? The first echoes, before the summer, reported a revaluation close to 2.9% of the increase applied to unemployment benefits. Such a decision would be very badly received by retirees, as evidenced by Dominique Fabre, Secretary General CFDT Retraits: It would be incomprehensible if there were no significant revaluation, up to inflation. Pascale Coton, Agirc-Arrco negotiator for the CFTC confides thank you for the information have demanded an increase of at least 4%.
According to our information, the revaluation will probably be lower than annual inflation in 2022, expected at 5.3% by INSEE, but higher than the 4% increase anticipated to be applied to the basic schemes this summer. An increase close to 5% would be possible.
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Why don’t all schemes increase pensions at the same rate?
The constraint that Agirc-Arrco has is that the plan has a regulatory obligation to have solid financial accounts, with significant reserves in balance, explains Valrie Batigne, founder and director of Sapiendo Retraite. A balance that is mainly based on the contributions of active employees. The 4% increase for the Cnav [en plus des 1,1% de janvier dernier, soit 5,1% sur l’anne 2022, NDLR]decided by the State, can create a loss and worsen the deficit… Something that Agirc-Arrco cannot afford.
This obligation of financial balance, a delicate balancing act between employee contributions and pensions paid on withdrawals, is imposed on almost all schemes. With a few exceptions. The basic scheme of the Cnav, therefore, but also the basic scheme of civil servants [SRE, NDLR] and the special plans have no obligation to respect financial ratios, recalls Valrie Batigne, who fears very different fortunes according to the profiles of withdrawals: Yes there will probably be big gaps this year in terms of upgrades. Inflation may allow some schemes to consolidate their long-term accounts, by increasing pensions at a slower rate than inflation, while others will follow the rise in prices. There will also be a gap between the regimes forced to ensure their financial solidity and those who have not made these same efforts.
The increase in the complementary Agirc-Arrco depends both on the financial reserves of the plan, the increase in the average salary and the level of inflation… Good news: according to our information, the estimates of the Agirc-Arrco concerning the evolution wages exceed 4.5%. If the average salary per head increases in the forecasts by October, the trend could be reversed, explains Rgis Mezzasalma, confederal pension adviser at the CGT. In short: a good surprise – that is to say a revaluation in line with inflation – is not not totally rule out for the complementary Agirc-Arrco. The CGT even claims an additional boost to the usual calculation rule, and this possibility would not be completely unthinkable.
What monthly increase can you anticipate, in euros?
Marie receives a pension close to the average pension for a former private sector employee: 1,500 euros in net pension in 2022, including 1,000 euros paid by the Cnav and 500 euros by Agirc-Arrco.
- In september, Marie received 1080 euros from the Cnav, or 4% monthly increase + compensation for the previous pension which should have already benefited from it. The Agirc-Arrco pension of September 1 was unchanged. That is 1580 euros in total.
- In october, Marie will receive 1040euros from the Cnav on October 7, a new normal pension. And 500 euros from Agirc-Arrco on October 3. That is 1540 euros in total.
- In november, Marie will receive a new 1040euros from the Cnav on November 9. Agirc-Arrco’s November 2 pension will be revalued. Of how much? In a favorable scenario of 5% increase, the supplementary pension will be 525 euros. That is 1565 euros in total.
Purchasing power: why withdrawals are estimated lss
Withdrawals get poorer over the years. Because the revaluations of recent years on basic and complementary pensions under-compensate for inflation, points out Christian Bourreau, president of the French Union of Retirees (UFR). Following too low pension increases, and following the increase in the CSG in 2018, the UFR estimates that a person who retired in 2007 whose pension is greater than 2000 euros has since lost 6.1% of purchasing power each month on his Cnav pension, and 6.7% on a complementary Arrco.
Withdrawals get poorer over the years
Focusing only on supplementary schemes, Sapiendo estimates the decline in Agirc-Arrco pensions in the face of inflation at 4.2% over the past 10 years, while the additional civil service pension has only been reduced by 1. 2% over the same period and the additional 2% for lawyers.
What increase can you expect for January 2023?
The 4% increase for the basic pension in September is only an advance on the annual increase on 1 January. Thus the usual revaluation of the basic pension on January 1, 2023 will take into account the anticipated increase of 4%. Little chance, under these circumstances, of seeing the Cnav pension jump in January: If inflation stagnates, the revaluation remains acquired but there will be no new revaluation in January, explains Valrie Batigne, of Sapiendo. If inflation continues to rise, a new revaluation will apply in January, as provided for by the Social Security Code.