Throughout your career, you have contributed towards your retirement, and you will be able to claim your pension when you reach the legal retirement age at which you can claim your pension entitlement. But how do you estimate what those entitlements will be?
The pension reform to be presented to Parliament in the second half of 2019 aims to make major changes to the current system. The calculation of your rights could therefore evolve.
The keys to estimating your basic pension
As legislation currently stands, the calculation of your pension rights depends on several criteria: income received during your career, your length of service and your retirement age (the age at which you exercise your pension rights).
The equation is as follows :
To qualify for a pension calculated at the maximum rate (50% of the average of your best 25 years for employees in the general regime), you must have contributed a certain number of quarters, variable according to your year of birth. If you are missing quarters when you request retirement, your pension rate will then be calculated with a décote (reduction). This calculation is irreversible.
Note: If, by choice, you stop working well before the legal retirement age or if your working history has been irregular, there is a minimum basic pension amount, also called a contributory minimum. This system can provide social security coverage and trigger other pension-related rights.
Calculation of the supplementary pension
In addition to the basic retirement pension, there is also a supplementary retirement pension. On 1st January 2019, Agirc (General Association of Supplementary Pension Institutions for Managers) and Arrco (Association for the Supplementary Pension Scheme for Employees) merged into a single supplementary pay-as-you-go pension scheme for all employees in the private sector: Agirc-Arrco.
The amount of this supplementary pension is calculated according to a point system, accumulated through compulsory contributions paid throughout your career.
When you retire and apply for a pension, the number of points earned is multiplied by the value of a point, which fixed every year. With the creation of the Agirc-Arrco scheme, if you are a non-executive employee, your number of points remains the same (1 Arrco point = 1 Agirc-Arrco point). If you are an executive: your Arrco points and your Agirc points are grouped together in a single point account. On January 1st, your Arrco points become Agirc-Arrco points without conversion, your Agirc points are converted into Agirc-Arrco points via a formula that guarantees a strict equivalence of your rights. To help you measure the change in your pensions, a conversion calculator is available on the Agirc-Arcco website.
With the creation of the Agirc-Arrco scheme, social partners have established new conditions for retirement. From 1st January, the introduction of a bonus-malus system should encourage employees and managers born in 1957 to work longer. If you meet the conditions for a basic full rate pension and immediately request the liquidation of your supplementary pension, it will be reduced by 10% for three years, until you reach the age of 67. To avoid this penalty, you will have to postpone your retirement by one year. A bonus to be received for 1 year is also provided for employees who extend their activity from two to four additional years: 10% for a 2-year delay, 20% for 3 years, 30% for 4 years.
There are many special schemes in France which complicate the estimation of your pension rights. You can, depending on your career, be a multi-pensioner who benefits from several plans... Feel free to consult our All your questions about retirement section or ask your HSBC advisor.
Test possible situations with our simulator
To estimate your future retirement pension, use our simulator.
While this tool allows you to study different scenarios, please note it is based on legislation as of 01/01/2018.