As of April 1st, around 700,000 retirees from the private sector are seeing the end of the temporary 10% reduction (“malus”) applied to their supplementary pensions, as agreed upon in October by the administrators of the Agirc-Arrco pension scheme. This penalty had already stopped applying to new retirees on December 1st, 2023. The retirees affected by this change will see the difference in their pension reflected in their bank account on Tuesday, April 2nd, due to April 1st being a holiday. They have been notified via email and their personal online accounts of the new amount of their pension, with no retroactive effects for previous months.
The Agirc-Arrco scheme states that the average gain in pension will be around 60 euros per month, with no additional steps required by the retirees. Those receiving a temporary bonus will continue to receive it according to the original schedule. Since 2019, 42% of new retirees have experienced the “malus” reduction on their pensions, which was designed to encourage workers to continue working for an additional year even if they were eligible to retire at full rate. Failure to do so resulted in a 10% reduction for three years, with a small percentage eligible for a reduced rate of 5%. A bonus was offered for those working an additional two to four years, which will remain in place for those unaffected by the retirement reform.
The decision to end the “malus” was made in October by the trade unions and employer representatives, who co-manage the scheme, in a new governance agreement lasting until 2026. This agreement takes into account the improved financial situation of the scheme and the new rules introduced by the retirement reform that came into effect on September 1st. The agreement led to a 4.9% increase in pensions to offset inflation. About 42% of new retirees have been affected by the “malus” since 2019, while 1.3% received a bonus, according to data shared by the Agirc-Arrco. The end of the “malus” will eventually cost the scheme 500 million euros annually. The supplementary Agirc-Arrco pension represents between 30% (for lower incomes) and 60% (for executives) of the total pension for former private sector employees.
Changes come into effect on April 1st affecting retirement, social welfare, family allowances, mortgage loans, environmental taxes, and home renovation subsidies. This includes adjustments to the pension scheme, such as the removal of the supplementary pension reduction for retirees, reflecting the financial stability of the Agirc-Arrco scheme and the impact of the retirement reform on pension calculations. The decision to end the penalty for new retirees was due to a shift in policy to encourage continued employment and ensure financial stability for pensioners. This change will improve the financial situation for many retirees and provide a boost to their monthly pension payments.
