Would all UK state retirees in France be affected by the hike limit plan? – .

Would all UK state retirees in France be affected by the hike limit plan? – .

The UK government has hinted strongly that it may relax its protection of ‘triple lock’ state pensions, which would affect UK state pensioners in many countries around the world, including France.
Already, the British state pension is one of the least generous in the group of developed Western democracies in the OECD, although this is partly offset by the fact that national insurance payments by British workers for the pension are relatively low.

The triple lockdown – which the 2019 Tory manifesto promised to maintain – means the state pension would be subject to regular annual increases in April tied to the higher of:

  • Inflation
  • Wage growth
  • 2,5%

However, the UK’s Office for National Statistics has released data showing wage growth of 8.8% as the country recovers from layoffs, vacation periods and wage cuts last year.

With the state full pension currently at € 179.60 / week, it could drop to € 195 next spring, but a spokesperson for Prime Minister Boris Johnson said yesterday the government was concerned about rising wages .

“I think we recognize the legitimate concerns about potentially artificially inflated incomes impacting pension upgrades,” he said.

“Any decision on future changes to the triple lockdown will be made at the appropriate time based on the latest data, and of course, we will continue to support the elderly, while ensuring that future decisions are fair with retirees and taxpayers. No decision has been made. “

The UK would consider alternatives such as temporarily removing the triple lockdown pay element or next year using average pay increases over the past two years, including a 0% hike last year .

Would all retirees of the British State in France be affected?

The triple lock mechanism only benefits Britons who have moved abroad if they live in the EU or in another country that has a social security agreement with the UK. In other places, such as Canada and Australia, UK state pensions are frozen when a person moves abroad or at the rate at which they begin to apply.

The Brexit Withdrawal Agreement guarantees the payment of state pensions revalued annually to British state retirees covered by this agreement, that is to say to Britons living in France by the end of 2020 and who have requested the safeguard of their residency rights with a new Brexit WA residency card.

The same goes for future British retirees under the trade and cooperation agreement signed between the UK and the EU at the end of last year.

So, yes, British retirees in France who depend on state pension income would be affected by this as well. This is because many of those who have lived in France for a few years have also seen the purchasing power of British pensioners decline due to the decline in the value of the pound since the Brexit vote.

How does the state pension in France compare to that in the UK?

In general, the French pension system results in a more generous pension.

However, the French generally pay more in their pensions via social security charges on wages or other work, compared to national insurance in the UK.

UK national insurance for workers is around 18% for a worker with an average UK salary, but also goes towards sickness benefit, maternity leave and unemployment benefit.

In France, payments are capped as soon as wages exceed a certain level, however, for most workers, old-age pension contributions alone represent more than 15% of gross wages. Total contributions, which go to items similar to those in the UK, as well as healthcare, are at least 46% of gross salary, according to French accountants L’Expert-Comptable.com.

The main difference, however, is that when you reach state retirement age, the UK state pension is based on having paid into state coffers while working, then to receive money based on the state’s current fixed retirement rate. The French pension is an insurance scheme where, subject to certain ceilings and adjustments, the amount you receive is linked to the amount you have contributed.

This means that in proportion to the income from working life, the British state pension is more “generous” for those with low incomes while this does not apply to the French pension.

The latest figures from the OECD show that for a person earning an average salary in the UK, the state pension represents 28.4% of their earnings while they were working. For someone who was only earning half of the average salary, it is 51% and for someone who was earning 150% of the average salary, it is only 20.2%.

By comparison in France these figures are 73.6%, 71.4% and 69%.

OECD figures on government spending on old age pensions also show that France spends a higher percentage of its GDP and overall government spending on this sector than the UK, respectively. 13.9% and 24.4% for France and 6.2% and 14.8% for the United Kingdom. .

Supplementary pension benefits in France are also more generous than in the UK, as the UK pension credit (which cannot be claimed abroad) currently supplements a single person’s pension at just 177.10 £ per week, which is less than the current full board amount.

France’s Solidarity Allowance for the Elderly (ASPA) supplements income up to £ 906.81 per month for a single person or £ 1,407.80 / month for a couple. Brits covered by the WA agreement are eligible, but in the future only those who hold a residence permit allowing them to work for 10 years or more will be considered non-EU citizens.

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