How to calculate a French pension

Mixing self-employment, salaries and UK work can all affect your French pension

19 March 2013

PLEASE can you explain the compatibility between pensions built up in self-employment in France and ones accrued in employment. If you have periods of both are they totted up to see how many years you have paid into the French system? Also, can the French authorities take into account periods you spent paying into foreign systems? How does this all compare to the UK? G.L.

The easiest way to explain the French pension system is to consider that an employee or self-employed person buys points per calendar quarter, buying more according to the amount of the income on which the calculation is based.

The system is then segregated for employees with cadre (executive) status who benefit from extra points and, again according to income levels. For both employees and the self-employed, the system is also segregated into professions and business activities. When the person reaches retirement age, they have acquired a certain number of standard points plus additional points either due to their income levels or status or professional or business activity.

At retirement, the value of the point is ascertained, then multiplied by the total number of points held to give the pension amount. In general, to have a full pension, you need to have accumulated around 160 quarters, and at least 40-odd quarters are required in order to qualify for any form of pension. The quarters of a self-employed person can be accumulated with the per-son’s quarters as an employee, though sometimes because of the businesses or professions involved and pension rights dating back to very old laws, the schemes can be kept apart, causing two pensions to be generated.

Depending on the activity in which someone is involved, a higher-paid employee generally gains a better pension than a counterpart who was self employed. However the self-employed pay less in social charges, so are more able to make private pension arrangements. There are reciprocal EU rules which mean periods of payments in another EU state may, depending on the specifics of your case, possibly increase the amount of pension that you can claim in France. With regard to comparison to the UK system, this is not really possible since the UK pension is a state pension that is fixed for everyone according to their status and paid from the social security funds.

Here, in France, the pension system is more than the state system (in the UK sense), even though it might be operated by the state. It is much more like a proper pension scheme since it can pay out some 70% of the final salary or earnings before taking retirement. The other point is that while it is the state that runs the pension scheme, it is in fact caisses (funds) that act for the government to collect premiums. There can be several of these for any one activity, and they can vary in size, but in general they all have the same function, many having their roots in old regional organisations.

French pensions are complex and vary depending on whether you are self-employed or employed and the nature of the business activity involved. So, seeking help from a professional who is regulated to advise on French pensions may be advisable. Connexion publishes a helpguide to pensions in France. It is available as a download or printed version via our website for €7.50.

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