Pensions: indexation to inflation financed by the elimination of the tax allowance

Any indexation of pensions to inflation will be financed, in proportion, by the partial, or even total, elimination of the 10% reduction from which retirees benefit, Minister of Public Accounts David Amiel indicated on Friday on Sud Radio. In search of savings in a context of public accounts in the red and growth at half mast, the government does not wish to both finance the indexation of all pensions and support the entire tax allowance for professional expenses available to retirees, the minister said on Friday.

Increasing all pensions to the level of inflation “implies removing the 10% deduction for professional income tax expenses from which retirees benefit,” assured David Amiel, arguing that “indexing all pensions to inflation” would cost “more than 6 billion euros next year,” and that “of these 6 billion, we do not have the first euro today.” Another option would be to index “only part” of pensions, “the smallest pensions for example,” said David Amiel. “But that implies reducing very sharply” this entire allowance, “to the nearest euro”, insisted the minister, according to whom it is impossible to maintain the two measures without “exploding the deficit”.

A delicate arbitration

“What is certain is that we will have to choose between the two, there can be no half-measures,” insisted David Amiel, specifying that Prime Minister Sébastien Lecornu “will arbitrate(it)”. Currently, all retirees can, for professional expenses (housekeeper, gardener, etc.), reduce their declared income by 10%, up to a limit of 4,000 euros. According to Bercy, this reduction costs 6 billion to public finances each year, the same amount as indexing pensions to inflation.

In recent years, the question of partially or completely eliminating this reduction which dates from 1978 has come back into the debate. In 2025, the deletion appeared in the Finance Bill (PLF), before being rejected in committee at the National Assembly. On Sud Radio, David Amiel also indicated that he had proposed to the Prime Minister “reforms of certain tax loopholes which only benefit the most fortunate”, without further details.