French pension guide: The French pension system for expats
Certain foreigners are entitled to a French pension, although the rules of the French pension system can make it complicated for certain expats.
A French pension is typically available to foreigners who live and work in France for a set number of years and meet other conditions. The social security system in France (Securite Sociale) is the public pension reserve fund which all employees in France are legally obligated to pay before they can claim a French pension. Consequently, the French pension system for foreigners living and working in France can be complex and many conditions must be met to receive la retraite (pension in French).
This guide gives you an overview of who is eligible to claim a French pension and the type of pension plans available, the French pension age and pension rates. If you live and work in France you will typically be entitled to a French state pension, but you can also transfer some pensions from your own country – which can be advantageous for certain foreigners retiring to France.
Find out below if you are entitled to a French pension:
- Who qualifies for a French pension?
- The three-pillar French pension system
- How to calculate your French pension rates
- EU pensions
- Tax on pensions in France
- Survivors' pension in France
- How to apply for a French pension
- French pension reforms
- Pension options for expats
Employees in France contribute to their own French pension through a compulsory pay-as-you-go French state pension system (Retraite De Base or Minimum State Pension), taken via social security contributions. However, earners can also pay into a supplementary pension and/or private pension plan for more pension security.
To be entitled to receive any form of French pension (a pro-rata or minimum pension) you must have worked for at least 10 years in France, while the maximum pension amount can only be claimed after working in France for 40–43 years (depending on when you were born).
The legal minimum or earliest retirement age in France is 62 (or 60 if born before 1 July 1951), although five years are added before you reach official French pension age and are entitled to draw your full French pension. Workers born after 1 January 1955 are not entitled to a full French state pension until they are 67.
There are some exceptions for early retirement, where you can receive a French pension before the French pension age. Exceptions for early retirement typically apply to those who have worked many years of services (ie. from a young age), those with a disability or those who have worked in physically stressful or unhealthy environments. Ardous workers may be able to retire up to two years earlier than statutory age, for example, while those with disabilities may be able to retire from 55 to 59. Many conditions apply.
Employees who have fufilled their French pension work requirements do have the option to continue working after French pension age; a pension increase is typically offered per extra quarter worked past pension age, while a deduction is taken for every quarter taken before official pension age. There are many conditions that can affect your French pension, for example, low paid workers can receive 85 percent of the country’s minimum wage; read how to calculate your French pension.
Similar to elsewhere, the French pension system is made up of three pillars: French state pension, compulsory supplementary pensions and voluntary private pensions. Workers who want to boost their pension rate can contribute into all three pillars, with different conditions applying to each French pension type.
French state pension
Since 2012, retirees have to work for at least 41.5 years before being entitled to a full French state pension (or 40 if born before 1952). This will rise to 42 years in 2018, and to 43 years by 2035 for those born 1973 onwards. Otherwise, a pro-rata French pension can be claimed after working at least 10 years in France.
The state French pension scheme then entitles retirees to draw a maximum of 50 percent of their annual average earnings up to a limit of EUR 35,000 per year. For those born 1953, a minimum pension rate is secured at 37.5 percent.
Compulsory supplementary pension
Workers in France are obligated by law to pay into supplementary pensions, administered by industry-specific funds. The most common are AGIRC (for executives) and ARRCO (for non-executives), which merged in 2003. Contributions are paid by employers and employees on a pay-as-you-go basis.
Your pension rates are calculated based on 'points' accrued during your working career, while your pension amount will be typically calculated on the average of your entire working salary, not the best 25 years as in the French state pension.
Under the scheme members are not entitled to receive a full pension until the French pension age of 65 or 67 (depending on year of birth), although they can claim a AGRIC/ARRCO full pension with early retirement at age 60/62 if they paid into social security for at least 40–43 years. As a general rule, once you met the conditions of a full-rate French state pension, your supplementary pension will be paid at the full rate as well.
If you have not made contributions for the full term, your pension rates are calculated on the number of years you contributed to the state pension; early retirement with a decreased pension rate can be taken age from 55 or 57 (depending on birth).
Survivor and widow French pensions are also offered. Surviving spouses (with young children, or older than 55–60) can claim up to 60 percent of an insured deceased spouse's pension, while orphaned children (under 21–25) can claim between 30–50 percent of the accrued deceased's pension, with conditions varying depending on which scheme they were part of.
Voluntary private pensions
Voluntary private pensions are also encouraged by the French government. They are typically paid through a ‘Company Savings Plan’ which is a tax efficient means of planning for retirement. Workers have the option to take out a five-year or 10-year policy, but since 2004 the latter scheme has been available ‘until retirement'. Contributions can be as low as EUR 50 a month and investors are eligible for income tax credits of up to 10 percent of the total revenue.
Employer-paid private pension plans (company pensions) exist, although are usually only offered to excutive employees. You can also opt to take out your own private pension plans via banks, pension funds or insueance brokers.
Your pension amount is calculated using the number of 'quarters' you worked and the amount of insurance paid. For each quarter you work, you accumulate points which are determined on the amount of earned income and the type of industry you work in. Executives benefit from additional points in accordance with income levels.
The amount of French pension you will receive – or your pension rates – are calculated on three factors explained below.
- Basic salary or Average Annual Earnings (SAM): This is calculated from your average earnings on which you paid social security contributions. In 2008 the average annual earnings (SAM) model was readjusted to take into account the 25 best-earning years rather than a flat average. However, this rule will only apply to retirees born after 2007.
- Pension rate: you can receive a maximum of 50 percent of your basic salary, with a minimum cap of 37.5 percent for those born after 1953. You pension rate will be affected by a percentage calculated from how many conditions you meet; for example, if you worked more or less than the required amount of years, your pension rate will be increased or decreased respectively by set percentage amounts.
- The total period of insurance: this is a calculation of the years that qualify towards your French pension work period. It typically include the periods you paid into a social security scheme but other categories count as well, for example, parental leave, industrial or ardous work risk or unemployment may qualify toward your French pension period (or 'insurance period', ie. periods you remained under an insurance scheme). Each category is classified into 'quarters'; to receive the full 50 percent pension rate you must have 160–172 quarters (depending on your age) when you are assessed, or 40 quarters (10 years) for a minimum pension. This complex calculation system is explained on the French government's website (in English).
Women who take maternity leave receive pension benefits: A maximum of eight quarters are automatically added for each child and a further four for raising the child, including adopted children.
There are incentives to keep employees working in France, typically in the form of penalities and rewards for each 'quarter' that you retire early or work past the legal French retirement age, respectively. Pension rates typically depend on the year you were born, for example, 1.25 percent will be deducted (if born after 1953) for each quarter taken before legal retirement, while workers older than minimum retirement age can receive an additional 1.25 percent per extra quarter worked and those older than the French pension age will receive an additional 2.5 percent on their pension rates.
There are also conditions to ensure minimum and maximum French pension rates. There is a French pension supplementary allowance (Allocation de solidarité aux personnes âgées or ASPA), for example, to ensure all pensioners living alone get at least EUR 800 per month. Low-income earners who qualify for a French pension will also receive a minimum French pension rate of around EUR 630 per month regardless of their previous salary, along with any other supplementary pensions up to a maximum of around EUR 1,136.
In any case, the basic French state pension can never exceed a maximum French pension rate of 50 percent of the social security ceiling (EUR 1,609 per month in 2016).
If you don't meet the time requirements for a French pension (around 40–43 years) but you've worked in other European countries, in some cases you can combine the total number of years worked within the European Union to qualify for a French pension or get higher pension rates. For example, if you only worked 10 years in France but 32 years in Spain, you may still qualify for a pro-rata French pension; that is, you will qualify but will receive a reduced pension rate based on 10 years' work.
You must seek advice from the pension authority in your country of residence or where you previously worked to see what applies in your situation. In any case, if you have worked in more than one European country in can be advantageous to see if what pension rights you can claim in each one. See a detailed explanation and calculations on the EU's webpage.
Expats that live, work or retire in France are liable to pay French taxes on their pension in France. Under French law, a French pension earned from employment is taxable in the same way as a salary.
French state pensions, occupational pensions and private pensions are subject to a 10 percent tax deduction (minimum EUR 377 to maximum EUR 3,689 per household per year). Tax is based on household rather than individuals to benefit couples where one spouse earns more than the other.
French tax rates are based on a sliding scale from 14–45 percent depending on your income bracket (read more about taxes in France, and in some cases all forms of income will be applicable to French taxes. Social charges are also applied at a rate of 7.1 percent. However, some pension holders are exempt (ie. Form S1 holders in UK).
If you have an existing pension in your own country, either private or state, you need to know the tax rules for both France and your own country. France has tax agreements with many of its European neighbours plus several other countries around the world. As a consequence, retirees to France can avoid paying tax twice. You can find a full list of countries that have double-taxation or social security treaties with France or see the French government's tax treaties information page (in French).
Survivors are not automatically entitled to the French pension of a spouse or ex-spouse in France. Reversion pensions are only paid to surviving spouses if they are aged 55 or more and have a total income level below a set amount. In some cases those aged less than 55 on a low income can claim a widowhood allowance, although the French pension authority will assess if it applies.
The amount payable is no more than 54 percent of the deceased's French pension, but provided the survivor earns no more than a maximum amount (EUR 853.25 per month in 2016), increments of 11.1 percent are added each year. If the deceased was married on more than one occasion, the pension is shared between former spouses; if children were involved, the pension rate can be higher.
However, in situations where a surviving spouse has remarried, the new household income is taken into account in order to satisfy the income means test.
The French government plans to introduce further French pension reforms to address deficit and other problems. By 2035 employees born in 1973 and onwards will be required to work for 43 years before claiming a French pension. Pension contributions to the French pension system will also increase to 0.3 percent by 2017.
Most employees in France are covered by the compulsory ARRCO and AGIRC French pension plans. AGIRC applies only to cadres (executives, managers and white-collar employees), while ARRCO applies to both cadres and non-cadres (blue-collar) staff. These French pension plans are funded by employer and employee social security contributions based on set percentages of pay that differ between the plans, as do the benefit formulas. There are ongoing efforts to address the plans’ serious financial imbalances by adjusting benefits, increasing contributions and merging the two plans' operations into one (expected 2019) to cut costs.
Once you reach the statutory retirement age, you need to contact the Caisse Nationale d’Assurance Vieillesse (CNAV). You are entitled to receive a pro-rata French pension calculated in accordance with the amount of insurance you have paid into the French social system and other factors relating to your individual situation. If you live abroad, the French pension authority provides a guide on how to claim an international old-age French pension.
CNAV: 110 Rue de Flandres, 75951 Paris CEDEX 19
+33 971 10 3960 | www.retraite.cnav.fr
Before claiming your French pension, you should weigh up the pros and cons with regards to tax implications on your pensions and assets in all countries that apply.
Expatriates can live in France on various types of pensions earned in their own country:
- State pension
- Income drawdown
- Self-invested personal pensions (SIPP)
- Qualifying Recognised Overseas Pension Schemes (QROPS)
State pensions may be liable to taxes in your own country and in France, leading retirees to pay taxes in both countries. However, citizens of countries that have double-taxation treaties with France can reclaim tax from their own country.
The income drawdown scheme gives you two options; capped and flexible. Capped schemes are the most common: you choose how much money you draw from your pension each month. If you want to draw a lump sum, you can draw up to certain amount (usually around 25 percent) of the total value of the pension fund.
Flexible drawdown schemes allow you to draw any amount you wish provided the value of the pension fund satisfies the minimum income requirement (MIR). This option allows you to remove all your funds from your homeland pension and reinvest them in French commodities that may be more financially advantageous.
Self-invested personal pensions (SIPPs)
As is the case in most countries, state pensions don’t accrue enough savings to provide pensioners with insufficient income. Private pensions have been popular in France since the 1960s. In 2006, new pension rules were introduced to allow expats retiring in France to transfer SIPPs from abroad. The rules are somewhat complex as it depends on the type of funds being accessed in an offshore account. Offshore pension funds are taxable, unless the scheme is 'tax-free' income – but such funds may be disqualified under the rules of QROPS as they are not deemed to be in the spirit of the French social system.
Qualifying Recognised Overseas Pension Schemes (QROPS)
Should a QROPS be a viable pension solution, you will be entitled to draw 30 percent of your pension fund tax-free on retirement in the UK, take advantage of favourable inheritance tax options, and transfer the rest to a French pension or other investment schemes to avoid charges on currency exchange.
Since 2012, however, there is less choice for QROPS in France. There are situations where they can be advantageous but it is recommended you seek advice from a financial advisor before deciding to take out a QROPS or switch an existing pension. Read if QROPS applies to you.
Read more on pensions in France
- Visit the French pension insurance authority (Assurance retraite) website for more information.
- A guide on how to calculate your French pension as an international.
Click to the top of our guide to French pensions.
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