As for the salary or other income received throughout his professional career, the amount of a retirement pension is always expressed in gross, i.e. before taxes and social security contributions as we are used to saying. For a retirement pension, the amount that actually comes back into the pocket of a retiree is what is called the net amount, that is to say the gross amount of his pension from which social security contributions have been withdrawn and a portion of the income tax due for taxable retirees.
The amount of a basic retirement pension is always expressed gross by the various pension funds. It is higher than what a retiree actually receives in the end because this gross amount designates the level of his pension before an amount corresponding to social security contributions is withdrawn and, for taxable retirees, another amount related to the pension. income tax to which they are subject.
In the same way, a supplementary retirement pension and a survivor's pension are expressed gross because they are also subject to the deduction of certain social security contributions and to the deduction at source of income tax.
To summarize, the amount of retirement pension actually received by a retiree is the amount expressed net, which can be calculated with the following formula:
Net amount =Gross amount – Social security deductions – Income tax deduction at source.
Retirees affiliated to the compulsory health insurance scheme and domiciled in France for tax purposes see the gross amount of their retirement pension subject to social security contributions, which therefore reduce this amount.
Only retirees whose reference tax income (data calculated by the administration from the income tax return) does not exceed a certain income threshold, which depends on the number of tax shares in their household and their place of residence (mainland or overseas departments), benefit from a retirement pension which is not subject to these social contributions.
For the others, these social contributions are of three types:they are the Generalized Social Contribution (CSG), a tax which finances Social Security, the Contribution for the Reimbursement of the Social Debt (CRDS), a tax allocated to the repayment of the social debt as its name suggests, and of the Additional Solidarity Contribution for Autonomy (Casa), a contribution which is used to finance the loss of autonomy of the elderly and disabled.
The amounts of these social security contributions, which are deducted from the gross amount of a retirement pension, are proportional to what a retiree receives. Indeed, each of these deductions corresponds to a rate (therefore a percentage) set by the public authorities according to the situation of each pensioner.
Thus, the rates of the CSG, one of the social security contributions which is deducted from the gross amount of a retirement pension, are 8.3%, 6.6% or 3.8% depending on the amount of the taxable income of reference for retirees. The CRDS rate is fixed:it is 0.5%. That of the Casa is 0.3%.
Note:retirement pensions are subject to the Casa only if they are subject to the CSG deduction at the rates of 8.3% and 6.6%. In other words, retirees who pay 3.8% CSG due to the low amount of their reference tax income are exempt from the Casa.
In total, the rates of deduction of social security contributions which are deducted from the gross amount of a retirement pension range from 4.3% to 9.1% depending on the retiree's income and his family situation.
To see more clearly and know exactly the CSG rate deducted from the gross amount of their pension according to their place of residence, the number of tax shares in their household, and their reference tax income, each retiree can use a simulator made available to them on the Pension Insurance website.
Retirees domiciled outside France for tax purposes may be subject to the health insurance contribution which is therefore deducted from the gross amount of their retirement pension and whose rate is 3.2%. This is the case if they come under a compulsory French health insurance scheme or if they are of foreign nationality and have at least 15 years of old-age insurance in France.
Since its entry into force at the beginning of 2019, the deduction at source of income tax also concerns retirees who are liable for this tax.
Thus, the amount that these retirees owe to the tax authorities in respect of income tax is deducted directly from the gross amount of their pension, whether it is a basic, supplementary or a survivor's pension.
It is the pension funds that are charged by the General Directorate of Public Finances (DGFIP) with collecting income tax on each retirement pension. This is why a pensioner receives a pension from which this tax has already been withdrawn, i.e. a net amount once the social security contributions have also been deducted from his pension.
The amount of income tax withdrawn on the gross amount of a retirement pension is defined according to a rate provided by the tax authorities to pension funds. This rate is calculated on the basis of the retiree's last tax return. For non-taxable pensioners, this rate is 0%.
