Certain foreigners are entitled to a French pension, although the rules of the French pension system can make it complicated for some expats.
A French pension is typically available to foreigners who live and work in France for a set number of years. The social security system in France (Securite Sociale) is the public pension reserve fund that all employees in France pay into before they can claim a French pension. Consequently, the French pension system for foreigners is complex; foreign workers must meet many conditions before receiving a pension (la retraite).
Find out below if you can claim 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
Who qualifies for a French pension?
If you work in France, you may typically claim a French state pension. Alternatively, you can transfer some pensions from your own country; this can be advantageous for certain foreigners retiring to France.
Employees in France contribute to their French pension through a compulsory pay-as-you-go 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.
To claim any form of French pension, you must work 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 earliest retirement age in France is 62 (60 if born before 1 July 1951). Five years are added before you reach the French pension age and are entitled to draw your full pension. Workers born after 1 January 1955 cannot claim a full state pension until they’re 67.
There are some exceptions for early retirement. Exceptions typically apply to those who worked many years of service, those with a disability, or those who worked in stressful or unhealthy environments. These workers may retire up to two years earlier than statutory age; for example, those with disabilities could retire from 55 to 59. Many conditions apply.
Employees who have fulfilled their French pension work requirements do have the option to continue working after pension age. A pension increase is typically offered per extra quarter worked past pension age. 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% of the country’s minimum payment. Read even more about how to calculate your French pension.
The three-pillar French pension system
The French pension system has three pillars: state pension, compulsory supplementary pensions, and voluntary private pensions. Workers who want to boost their pension can contribute to all three pillars, with different conditions applying to each.
French state pension
Since 2012, retirees must work for at least 42 years before claiming a full French state pension (or 40 if born before 1952). This will rise to 43 years by 2035 for those born from 1973 onwards. Otherwise, it’s possible to claim a pro-rata French pension after working at least 10 years in France.
The state French pension scheme then entitles retirees to draw a maximum of 50% of their annual average earnings up to a limit of €39,732 per year. For those born since 1953, a minimum pension rate is 37.5%.
Compulsory supplementary pension
Workers in France must pay into supplementary pensions, which specific industries administer. The most common are AGIRC (for executives) and ARRCO (for non-executives), which merged in 2003. Employers and employees make contributions on a pay-as-you-go basis.
Your pension rates are calculated based on points accrued during your working career. Your pension amount is 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 cannot receive a full pension until the French pension age of 65 or 67 (depending on the 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. Once you meet the conditions of a full-rate state pension, your supplementary pension pays at the full rate as well.
If you didn’t contribute for the full term, 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 availabble. Surviving spouses (with young children, or older than 55–60) can claim up to 60% of an insured deceased spouse’s pension, while orphaned children (under 21–25) can claim between 30–50% 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; since 2004, the latter scheme has been available until retirement. Contributions can be as low as €50 a month. Investors are eligible for income tax credits of up to 10% of the total revenue.
Employer-paid private pension plans (company pensions) exist, although are usually for executive employees. You can also opt to take out your own private pension plans via banks, pension funds or insurance brokers.
How to calculate your French pension rates
Your pension amount depends on the number of quarters you work and the insurance you pay. For each quarter you work, you accumulate points for your income level and the industry you work in. Executives benefit from additional points in accordance with income.
The amount of French pension you receive depends on three factors.
- 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.
- Pension rate: you can receive a maximum of 50% of your basic salary, with a minimum cap of 37.5% for those born after 1953. Your pension rate is 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 changes 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 includes the periods you paid into a social security scheme but other categories count as well, for example, parental leave, industrial or arduous work risk or unemployment may qualify toward your French pension period (or insurance period). Each category is classified into quarters; to receive the full 50% 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 available on the French government’s website (in English).
Women who take maternity leave receive pension benefits. A maximum of eight quarters is automatically added for each child and a further four for raising the child, including adopted children.
Conditions and incentives
There are incentives to keep employees working in France. These are typically in the form of penalties 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% 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% per extra quarter worked and those older than the French pension age will receive an additional 2.5% 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) to ensure pensioners living alone get at least €833 per month. Low-income earners who qualify for a French pension also receive a minimum French pension rate of around €634.66 per month. This is regardless of their previous salary, along with any other supplementary pensions up to a maximum of around €1,136.
In any case, the basic French state pension can never exceed a maximum French pension rate of 50% of the social security ceiling. This amounted to €655.50 per month in 2016.
French pensions for EU citizens
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 worked 10 years in France but 32 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.
Tax on pensions
Expats 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% tax deduction (minimum €377 to maximum €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.
Taxes in France are based on a sliding scale from 14–45% depending on your income bracket. In some cases, all forms of income are subject to French taxes. Social charges also apply at a rate of 7.1%. However, some pension holders are exempt.
If you have a pension in another country, study the tax rules for both France and there. France has tax agreements with many of its European neighbors 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.
Survivors’ pension in France
Survivors are not automatically entitled to the French pension of a spouse or ex-spouse in France. Reversion pensions only pay to surviving spouses if they are over 55 and have a certain total income level. In some cases, those under 55 on a low income can claim a widowhood allowance; the French pension authority assesses if this applies.
The amount payable is no more than 54% of the deceased’s French pension, but provided the survivor earns no more than a maximum amount (€860.08 per month in 2018), increments of 11.1% 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.
Reforms for pensions in France
The French government plans to introduce further French pension reforms to address the deficit and other problems. By 2035, employees born in 1973 and onwards must work for 43 years before claiming a French pension.
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 to cut costs.
How to apply for a French pension
Once you reach the statutory retirement age, you need to contact the Caisse Nationale d’Assurance Vieillesse(CNAV). You may claim a pro-rata French pension in accordance with the amount of insurance paid into the French social system. 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
Pension options in France for expats
Before claiming your French pension, weigh up the pros and cons with regard to tax implications on your pensions and assets.
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%) 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. 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.
QROPS: transfer and consolidate your UK pension
Expats moving abroad from the UK may be able to transfer their pensions into a Qualified Recognized Overseas Pension Scheme (QROPS). QROPS allows expats to consolidate their pensions into one plan. This helps them manage their retirement funds more easily and avoid currency fluctuations.
There are many advantages to QROPS. However, they aren’t suitable or available to all UK pensioners. Take advice from an expert financial adviser such as AES.