PENSION INCREASE. The government has announced a 4% pension increase from July 1, 2022. Who is affected? What about add-ons? We take stock at the start of the week.
[Updated on July 19, 2022 at 8:07 a.m.] As part of the purchasing power bill aimed at protecting the most modest French people, in particular, in the face of the increasingly worrying inflationary risk (5.8% in June 2022 over a year), Emmanuel Macron, Elisabeth Borne and their government formalized the increase in retirement pensions by 4%. This increase will actually take effect from August 9, 2022, with retroactive effect from July 1, 2022. It concerns only basic retirement pensions. In other words, each month, for a pension of 1,200 euros, the monthly net gain will be 45 euros. A significant increase, especially given the rise in energy, food and fuel prices.
Be careful, don’t be fooled if you benefit from a supplementary pension (type Agirc Arrco or Ircatec). Indeed, these supplementary pensions depend on the social partners and are not subject to the 4% increase. However, they should also benefit from an increase (most likely below 3%), rather around November 1st. As a reminder, the delays in discussions in the Assembly between the various groups concerning the purchasing power bill and the updating of the computer systems managing the payment of pensions could come to stop this well-oiled machine. The first payment of the pension increase could therefore be delayed, and only take place in September 2022. A real blow for the many beneficiaries. This revaluation of retirement pensions aims to restore more purchasing power to our seniors, hit hard by the galloping inflation observed for several months.
The successive increases in the amount of retirement pensions (1% in January 2022 and 4% in July 2022) represent a cumulative increase of approximately 60 euros for a retirement pension equal to 1,200 euros according to Prime Minister Elisabeth Borne who gave this figure during an interview with France Bleu on June 7, 2022.
Be careful, however, it is not the exact amount that will be displayed on your total pension since remember that this increase only concerns basic retirement pensions, excluding supplementary ones. However, the average in France for basic pensions is 704 euros according to the statement of the National Pension Insurance Fund, the CNAV. If we take this figure, the 4% gain expected this summer represents an increase of 28 euros per month. For a pension of 1,200 euros, the increase amounts to 45 euros per month.
The 4% increase results from the inflation that has been affecting France for several months. It is therefore an “alignment” with inflation to help combat the loss of purchasing power. However, this decision is a significant development compared to the policy deployed by governments in recent years. For 10 years, retirement pensions were no longer indexed to inflation despite its inclusion in the Social Security Code, resulting in a loss of purchasing power of more than 10% in 10 years according to the orientation council of retreats. However, this 4% increase should not completely satisfy several pensioner unions who were demanding an increase of at least 4.5%, with retroactive effect from January 1.
The rules for increasing supplementary pensions (Agirc-Arrco, for example) differ from those for basic pensions. These supplementary pensions are calculated from the number of points acquired during the career, to which a value of the point is multiplied. Then, the social partners decide on a possible revaluation of the value of this point.
Generally, these pensions are increased every year on November 1st. In 2021, the value of the Agirc-Arrco point was revalued by 1%. It therefore went from 1.2714 euros to 1.2841 euros. Regarding these supplementary pensions, the Minister of the Economy Bruno Le Maire was clear: “It is up to the social partners to upgrade the supplementary pensions. We will upgrade the basic pensions.” So, a little more patience to know the next revaluation of the index point! But in all likelihood, the rise in supplementary pensions should not exceed 3% this fall, around 2.90%.
The overall retirement pension for civil servants consists mainly of the basic pension. A supplementary scheme, the “additional public service pension (RAFP)” also exists, but is not affected by the revaluation of retirement pensions. The increase in retirement pensions for civil servants should therefore be the same as for other employees.
The increase in pensions is effective from Friday July 1, 2022. De facto, the very first visible increase in retirement pensions will be visible during the first payment, the following month, namely August 9, 2022, a date revealed by Minister of Labor Olivier Dussopt in early June. “We want this indexation to inflation to be valid for July pensions. Under the general scheme, the July pension is paid on August 9,” he explained then. A retroactive effect to July 1 should be applied. Please note that the late start of the purchasing power bill due to heated discussions on the subject could delay the payment of this pension increase. For the time being, nothing is certain yet, but the first payment could finally take place during the month of September. A hard blow for the many beneficiaries.
