The tightening of combined employment and retirement will come into force next January

Restrictions on combining employment and retirement come into force: from January, new retirees under the age of 67 who return to work and receive more than 7,000 euros gross per year will see their pension reduced, confirm two decrees published this Tuesday, November 3, providing for exceptions. The reform, adopted last year, applies to all those who will receive their first retirement pension from January 1.

Any insured person who decides to leave before the legal age (64 years in the long term, 62 years and 9 months today, following the progressive application of the Borne reform) and who returns to work will see 100% of their income deducted from their pension.

An insured party between the legal minimum age and the “cancellation of the reduction” age, set at 67 years, will be able to fully accumulate their pension and 7,000 euros of earned income, including compensation received during sick leave. Beyond this threshold, 50% of additional earned income will be deducted from the pension. This ceiling of 7,000 euros will change each year, following the evolution of the Social Security ceiling (which depends in particular on the increase in salaries), specifies the decree. After age 67, however, full accumulation will be possible.

The second decree lists various professions and activities which benefit from exemptions. Thus, several professionals will be able to fully combine pension and income, including maternal and family assistants, people assisting the elderly or disabled, caretakers of buildings housed by the employer, caregivers in areas identified as medical deserts, etc. Other activities are not affected by the pension capping, such as income from “accommodation in rural areas in heritage properties”, or “activities of an artistic, literary, scientific nature, carried out on an ancillary basis”.

Around 710,000 people affected in 2020

The combination of employment and retirement concerned, according to the Court of Auditors, around 710,000 people in 2020, who earned on average 9,000 euros per year from their activity. Until now, two systems coexisted, full accumulation and capped accumulation. A person benefiting from a full pension could return to work without an income ceiling. Conversely, someone who retired before reaching the full rate saw the amount of the accumulation between pension and earned income capped at 160% of the gross amount of the SMIC or at their last gross monthly salary (the more advantageous of the two).

“7000 euros per year is less than 600 euros per month. Today, a 64-year-old full-rate retiree, who earns 20,000 euros per year, loses nothing of his pension. Tomorrow, it will lose 6,500,” lamented MP Michel Criaud (Horizons and Independents), during the government question session at the National Assembly, calling on the government to “reconsider this threshold”.

The old system “was very unfair”, “very favorable for careers without a hitch”, allowing some “to optimize, in advance, by reaching an agreement with their new employer”, but “restrictive for those who had experienced ups and downs”, replied the Minister of Labor, Jean-Pierre Farandou. “It is still a reform which brings in (...) 2 billion euros per year” for Social Security, “find others!”, he added. He did not rule out adding other exceptions, “as long as a profession is of general interest”.