PENSION INCREASE. The National Assembly voted in favor of raising pensions by 4% this week. For who ? And the add-ons? We tell you everything.
[Updated July 22, 2022 at 8:16 a.m.] Rare moment of agreement in the hemicycle! The deputies voted in the night from Wednesday to Thursday, the increase of 4% of the basic retirement pensions. With only two votes against, the amount of pensions will be increased from July 1, 2022. Faced with galloping inflation (5.8% in June over one year), which could reach 6.8% in September over twelve rolling months, some members of the opposition nevertheless railed against this increase, questioning the discrepancy between the amount of the increase and the rate of inflation. Particularly on the side of Nupes, according to Adrien Quatennens, deputy for the North, “the revaluations confirm reductions in purchasing power” and would therefore produce the opposite effect to that sought by the government. Important, this increase in pensions only concerns the basic scheme, supplementary pensions such as Agirc Arrco or Ircantec are not part of this reform, included in the purchasing power bill. Supplementary pensions, managed by the social partners, should benefit from a less significant increase (between 2.9% and 3%) on November 1, 2022.
Concerning retirement pensions from the basic scheme, each month, the 4% increase should represent a net gain of 45 euros for a pension of 1,200 euros, which is not negligible, particularly given the rise in energy prices, food and fuel. The rise in inflation is one of the main factors that motivated the executive to act in favor of pensions. The inflationary risk reached its peak in July 2022 according to the Minister of the Economy Bruno Le Maire, seriously reducing the purchasing power of our elders. 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. Indeed, nothing is yet fixed concerning the actual date of entry into force of the increase, despite the fact that it will benefit from a retroactive effect from 1 July 2022.
The successive increases in the amount of retirement pensions (1% in January 2022 and 4% in July 2022) represent a cumulative increase of around 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. This 4% increase should not, however, completely satisfy several pensioner unions who were demanding an increase of at least 4.5%, with retroactive effect from January 1.
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.
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.
