No rise in private sector workers’ supplementary French pension next year

The supplementary pensions of around 14 million former private sector workers will not see an increase for 2026 due to a disagreement between unions and employers over the new rate.

Supplementary pensions are paid in addition to the state pension under Agirc-Arrco, the mandatory supplementary pension scheme for private sector employees, with updated rates coming into force each November.

However, unions and employers need to agree on annual increases – which can match annual inflation levels in France – otherwise no increase is made. That is the case this year.

Monthly pensions from the scheme will therefore remain at current rates for at least the next year. 

The news comes as the government plans to freeze state pension payments at current levels next year by not raising them based on this year’s inflation as part of the 2026 budget.

State pension freeze at heart of issue

Although the annual revision of the private sector scheme generally uses inflation as a guideline, its managers must also ensure the ‘financial security’ of the scheme as a whole, balancing amounts going into as well as being taken out of the pot.

Sustaining the scheme’s security for the next 15 years is the benchmark at each evaluation, as well as having “at least six months of pension payments at any given time.” 

The scheme currently has reserves of around €86 billion according to public broadcaster France Info.

Unions were looking for payments to increase by 1%, the expected level of inflation in 2025, hoping the maximum-available uplift would help partially alleviate the income hit from state pensions being frozen in the budget.

Unions argued the healthy state of the scheme’s balance – €86 billion covers at least nine months of payments without taking into account any incoming revenue into the scheme – would allow for the measures. 

However, employers and employer-unions such as Medef preferred a 0.2% increase, arguing that it “appeared sustainable for retirees in light of the sharp slowdown in inflation [and] consistent with the pension freeze planned.” 

“Any increase below 0.6% was completely unjustifiable,” said France’s biggest union, the CFDT.

“The employers persisted [and] this lack of action… led to the impasse,” the union added, quoted in France Info. 

Other unions including the CGT criticised the move.

“[It is ] a purely dogmatic, ideological position of the employers, which is not justified by anything,” said CGT delegate Denis Gravouil to AFP, calling it a “scandal… it seems more like revenge in the current debate.” 

‘A signal of restraint’

Others have backed the decision however, arguing it is necessary to contribute to the slowdown in spending across all sectors in France. 

The freeze is “a signal of sobriety, of being more attentive to public spending,” said head of the Union des entreprises de proximité (union of local businesses) Michel Picon to France Info in an interview over the weekend.

Mr Picon also cited the current status of the pension reform as another reason employers wanted to be cautious. 

“The suspension [of the reform] which risks turning into a cancellation… means that the Agirc-Arrco scheme will be under greater strain," he said. 

"There will be more early retirees and fewer contributions collected, and all of this leads us to be sensible.” 

The pension reform, passed in 2023 and which raises the standard pension age to 64, is set to be temporarily suspended until the next presidential elections in 2027. 

“The social partners cannot do the same thing as the State, which, for 40 years… has been spending recklessly. Our responsibility is to ensure that if something happens, we have enough to pay retirees,” he added.