Thursday, July 10, 2014

She will be retired at 42 in France, and us?

One day a friend told me that one of her acquaintances will be retired next year, when she turns 42 years old. I was like, how is it possible? She is only several years older than me, but she will be retiring next year, whereas for me in 30 years?

Well, retirement is a sensitive topic in France, so my friend is not going to ask this person how does she manage to get off so early, but instead we analyse the situation and come out with three facts that would entitle her to early retirement:

1. Working in one of the x-government control companies (eg SNCF, France Telecom, EDF, La Poste...). These companies used to own by the government and since then have been privatized, but the government still own important shares and controls in them. They have one common point : good benefits for their employees such as earlier retirement than other public and private companies.

2. She has three kids. During my MIL's time, each kid entitles the women to get off 2 years earlier for retirement. So having three kids entitles her to get off 6 years earlier, and the fact that she works with x-government own company may amplifier this entitlement.

3. She used to work in the nuclear industry. Since it is considered as high risk industry, each trimester she worked may account for more, for example 1 trimester = 1 year.

We don't know if our analysis are close to the reality, but just to point out that retirement is not always a fair game in France. It really depends on which company, which industry and which benefit package you are enjoying. I once read a Brit's blog, he started working in France in his 40s, so he said by the time he retires, he would be working for 20++ years in France, and the fact that he needs to work 40++ years to get full retirement, he will eventually get nothing. Yes, the more working trimesters you owe, the more percentage your pension gets deducted.

The national motto of France is Freedom, Equality and Brotherhood. Sometimes I wonder which equality are we talking about. Equality for the poor? The rich? Or just for certain group of people?


  1. The benefit for mothers (2 years per child) does not allow them to retire sooner than the minimum legal age (62 for the moment, and a bit sooner for special professions like army, police, firemen...), but it can allow them to retire at that age even if they did not work the required number of trimesters because the children gives them a bonus (and it's not so much a bonus as a compensation for the carreer break they surely had to take for their children).

    Basically there are 3 rules for age of retirement :
    - Not before the age of 62, no matter how long you have worked
    - Having worked for 43 years (actually 172 trimesters)
    - At the age of 67 years, no matter how long you have worked you can retire with full benefits.

    Between the age of 62 and before you have your 172 trimesters, you can still retire but without full benefits
    Some time can count as validated trimesters even if you did not work : 2 years per child, unemployment rights, surely some kind of long sick leaves and it is in discussion to include student internships since they tend to do more and more of them before reaching a real work contract.
    Also, you are allowed to "buy back" your years spent in school in order to reach sooner the required number of trimesters.

    1. Hi Jem,

      Thanks for your clarifications. How would you explain the case for this woman who will be retired at 42 years old? Is she on a very special governmental plan? About not retired before 62, this applies probably to the private sectors? As I know many people who are retired before 62.

    2. For the case of this woman, I just found this link, actually you were right and I was minsinformed : there was a plan for civil servants mother of 3 children to retire without age condition with only 15 ears of effective service :

      But this plan is gradually shutting down since 2011.

      As for the age of 62, this is for the private sector and this is only since 2010, before that the age was 60.
      Exceptions in the private sector would be pre-retirement plans : when a company needed to lay down people, it was common to offer to the oldest employees retirement in advance to avoid firing younger people. This is less common now as this was multiplying the number of retirees.
      Also there is (was ?) a measure to allow unemployed person above 58 to stop actively searching for a new job : they would still get unemployment benefit until the age of retirement.

      This measures are only a trade-off between unemployment numbers and pension system deficit numbers so... one devil or the other. But the fact is that it is very difficult for a person, even highly skilled, to find a job after the age of 50. So in this condtions, what good does it make to push the retirement age even further ?

  2. Also, the matter of civil servants (government workers, city workers, teachers, state companies workers,...) is a really sensitive subject.

    Basically, they have better rules for retirement (earlier age, higher rate) than the general public but it was part of the package they accepted when they entered this profession to make up for low salaries.
    So if they are made to have the same retirement rules as the private sector then their salaries should also be raised to meet the private sector average.

    For example a school teacher with top performance grades makes 1 653 € net/month at the beginning of his carreer, 2 032 € after 10 years and 2 996 € after 30 years.
    For a person with more than 5 years of college this is rather low, and they cannot go to the competition to find a better paid position (at least not for the same job). (on a side note they do not have any mutuelle, CE, tickets resto, tickets vacances or other benefits found in most large companies)

    Still, they accepted this because they knew that they would have a long and well paid retirement thanks to their special rules. But now they see these benefits being regularly attacked as priviledges...

    1. Jem, for a software engineer with bac+5 in Nantes area their starting salary is also around 1600€ net. In this case a teacher and an engineer earn the same salary, while a teacher enjoys more vacations...

    2. You are right, the salary at the beginning of the carreer is roughly the same (and I started in Montpellier in 2002 with 1200€ net :) ) but as an engineer you can expect much more raises and if you are not happy with your salary you can always look for a new company (usually the biggest raises are when you change company) or find an area where salaries are higher, or even work abroad for a few years.

      Also one thing to note about teachers vacations : the summer vacations are note paid. So they have 8 weeks of paid vacation (the little vacations over the course of the year) + 2 months of mandatory unpaid vacations.

      As to help manage their budget over this unpaid months, they actually get paid 10/12th of their monthly salary each month so 1 377€/month for a beginner.

      Once again, the teacher chose that career knowing those facts and the lot of free time definitely was a plus, just like having free meals would be for a cook. But they have to feel trapped if you start stripping these benefits in the middle of their carreer as they have no leverage (other than strike) to escape the degradind conditions.

  3. I am guessing retirement in France and retirement in Malaysia means different things. Here, if we work in the private sector, when we retire, all we have is our EPF. How is it in France for the private sector, what sort of full benefits would a person get? Pension payments for the rest of life?

    1. Yes mun,

      In Malaysia, what you save (EPF) = what you get + interest rate
      In France, what you contribute to the retirement is immediately redistributed as pension to those who are retired. So, retirement fund is supported by those who are currently working. Since there will be more and more people retired and less and less people working, we are facing pension fund deficit every year.

  4. Yes, retirement means pension payments for the rest of your life. The level of the pension (if you work long enough to have full rate) is 50% of average monthly salary calculated on your 25 best paid years.

    On top of that some professions pay each month for a pension complement, and of course you also have the right to invest in a private retirement fund (actually, there are taxes benefits in order to encourage you to do so).

    It must be noted that non-salaried professions such as shopkeepers, crafters, artists, farmers, doctors, etc... do not have mandatory contributions and (if they want a retirement pension) have to take a private retirement fund (they would also have the capital of their work such as livestock, farming grounds, shops or patients sold at the time of retirement).

    1. Thank you Jem for the detailed information.