The acquisition of pension rights is based on an equation between the legal age, currently set at 62, and a contribution period which varies according to your year of birth.
In 2023, French people born in 1961 will, for example, have reached the required age to bow out but will have to prove that they have a retirement insurance period of at least 168 quarters (i.e. 42 years) in order to receive a full rate pension.
What happens outside of this scenario?
The premium, the new leitmotif
More and more workers are choosing to continue their careers beyond the age at which they can claim full retirement.
The goal?
To inflate the envelope of their future pension.
According to a survey by Schroders Global Investor Study published in 2018, French employees receive only 61% of their salary once they retire.
However, the fact of continuing to work after reaching the legal retirement age and having already acquired all of your contribution quarters allows you to benefit from an increase in your future pension.
This is called the premium.
To benefit from it, you do not have to take any steps since the calculation is automatic.
On the other hand, you must not have been retired first before continuing your activity.
How to earn more?
In detail, each additional quarter contributed during this extension of activity will be added to the others and will be taken into account in the future calculation of your rights.
Please note, these bonuses correspond to calendar quarters worked: unemployment, illness or work accident do not count.
As a result, your entire basic retirement pension will be increased by 1.25% for each quarter of premium contribution, i.e. an increase of 5% per additional year (against 0.75% per quarter for the liberal professions) .
You are then free to pursue your career for as long as you wish.
Note also that employees also benefit from this increase when they work beyond the age automatically giving rise to the right to the full rate, set between 65 and 67 years according to the year of birth.
The haircut, the sword of Damocles
Conversely, unless you benefit from the specific departure conditions for long, arduous careers or due to disability, requesting your retirement without justifying the necessary duration of insurance can cost you dearly.
Retirement insurance will indeed reduce your pension according to the number of missing quarters.
This is called the haircut.
To understand how it works, let's first remember that the full rate of a basic pension (excluding supplementary pension) corresponds only to 50% of your average annual salary calculated over your best twenty-five years of career.
However, in the event of a discount, this amount will be subject to a reduction coefficient of 1.25% per missing quarter, within the limit of 20 quarters.
In the worst case, your basic pension will therefore be calculated on 37.5% of your average reference salary instead of 50%.
The only way out: the discount does not apply if you have reached the automatic age for the full rate (between 65 and 67), even if you are missing quarters.
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And the supplementary pension?
In addition to contributions to the basic pension, workers also acquire rights to the supplementary pension scheme associated with their professional sector, which allows them to supplement the amount of their future pension. Unfortunately, when a haircut is applied to one, it is also applied to the other. So you lose on both counts. On the other hand, the bonus system has no equivalent and only allows you to revalue your basic pension.
Nevertheless, the extension of working hours gave ideas to Agirc-Arcco, the body responsible for supplementary pensions for employees and executives.
Since 2019, new retirees who hang up the year in which they reached the full rate now experience a temporary reduction in their pension of 10% for three years or up to a maximum of 67 years.
To avoid it, they must continue to work for 1 more year.
And if they continue their career beyond two years, they benefit from an increase in the pension for 1 year, knowing that the coefficient varies between 10 and 30% depending on the number of additional years.
Contact the official retirement insurance number 39 60 to take stock of your situation before making an irremediable decision.
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