Pension reform: what impact on the amount of your pension?

The pension reform will bring its share of changes in addition to the postponement of the legal retirement age. What about the amount?

On January 10, 2023, Elisabeth Borne reveals to the French the contours of the pension reform . Thus, we know a little more in detail the project of Emmanuel Macron when he wants to reform the pension system . Assets will they work more to earn less ? It is more complicated and you will understand it.

In fact, a person who would have validated all his trimesters before the legal age may now be entitled to a larger pension if she voluntarily decides to work until she is 64 . Not to mention the increase that the current system offers. The details of the discount and the premium in this article.

Pension reform: loss of premium

To better visualize this gap, let's take an example directly. Pascal is an employee born in 1980 . He started his career at the age of 20. By applying the current rules, Pascal could go to retirement at the age of 62, or even earlier .

However, in order to benefit from a full pension, he must complete 43 years of contribution , i.e. at age 63. Of course, if the man wants a bonus , he just has to work longer.

By doing so, he may have a bonus of 1.25% per additional quarter on sa basic pension . In other words, at the age of 64, Pascal will be able to enjoy a premium of 5%, 10% at age 65 , 15% at age 66 and so on.

If the pension reform comes into force, it all becomes obsolete . For good reason, the legal retirement age is changing. This goes from 62 years to 64 years with the possibility of leaving earlier in certain situations .

For Pascal's case, he will not be able to retire before age 64 . And this, even if it validates all the required quarters. As for the premium, it will come, of course, a little later. Either after the new legal age.

Clearly, for a full rate at age 64, Pascal must leave at age 65 to expect a 5% premium . Thus, by working until he is 67, he will only receive a 15% bonus . If you have followed correctly, Pascal has lost a year of premium.

Table 1

Pension reform: reduction of the discount

In what regarding the discount rate, the pension reform provides for the opposite . Or a decrease. During his appearance on BFMTV, the Minister of Labour, Olivier Dussopt, mentioned this subject.

Thereby, he acknowledges that the premium will be lower . However, at the same time, the bill provides 'a reduction in the discount of 5% per year between the legal age and the age of the full rate, for those who have not had all their trimesters' .

'The discount, which can be up to 25% today, will thus be limited to 15% tomorrow,' said the Minister of Labor, adding that this is intended not to penalize retirees.

Table 2

The direct consequence of this concerns in particular the insured whose career is incomplete. These may not suffer negative effects if the pension reform applies. However, it's not mechanical .

More or less favorable according to the PPI

Also, in its latest report, the Institute of Public Policy considers that “disabled and unfit people and people with incomplete careers will, for some of them, be affected in terms of the amount of pension” .

“This is in fact, when the career is incomplete, calculated in proportion to the duration validated in relation to the reference duration. The acceleration of this will therefore result, for the generations concerned, in a reduction in this pro rata, and therefore a reduction in the pension”, add the experts of the IPP.

This before concluding by saying:

“A raising of the minimum age to 64 years combined with a more rapid increase in the required duration turns out, for people with incomplete careers of the first generations affected by the reform, less favorable than the initial scenario of a more marked with the minimum age without acceleration of the required duration. »

Note that this does not apply to people who, at the base, should work beyond age 64 . Take the case of a person born in 1990 and started working at age 22 . This may retire at age 64 with a 5% discount .

And this, regardless of whether the pension reform applies or not. Moreover, she will be able to obtain a full pension at age 65 . If she plans to work until she is 67, this person will be entitled to a premium of up to 10% .

Source : bfmtv