Limit the damage today but also tomorrow. The Covid 19 epidemic has brought many sectors to a halt. As a result, some employees find themselves in partial activity, some without interruption since March 2020. Problem, these periods of inactivity were not taken into account until now for the calculation of retirement. The duration of the partial activity did not make it possible to obtain the quarters of contributions necessary to have a full pension. However, the longer the period of partial activity, the greater the impact on the retirement age or the level of pension could be. To avoid this situation, several legislative measures have been taken so that the quarters of partial activity are included in the calculation of retirement.
Thus, article 11 of law n ° 2020-734 of June 17, 2020 provides that the periods of partial activity between March 1, 2020 and December 31, 2020 are exceptionally taken into account for the opening of rights to the basic pension for insured persons covered by the pension insurance and the scheme for agricultural employees. This period was extended by article 8 of Law n ° 2020-1576 of December 14, 2020 on the financing of Social Security for 2021, which perpetuates the inclusion of periods of partial activity in pension rights at- beyond December 31, 2020.
>> Read also – Partial unemployment: you will need to have worked 220 hours to validate a quarter of retirement
A circular from the Cnav has just specified all the measures put in place. This document reminds that these periods are financed by the old age solidarity fund. Here are the main points to remember.
How is the calculation done?
A decree of the Council of State, dated December 1, 2020, specifies that a contingent of 220 compensated hours is necessary to validate a quarter assimilated under the basic pension, within the limit of 4 quarters per year. To understand this calculation, the Cnav gives several examples.
How to justify your periods of partial activity?
So that these periods are properly considered at the time of your retirement, it is advisable to keep your supporting documents which may be requested. For example, your payslip may be used to establish the number of hours compensated for the partial activity. It must be mentioned “the periods of perception of the hourly compensation for partial activity, the amount of said compensation received by the insured as well as the number of hours compensated for the partial activity”, stipulates the circular. Other documents can be provided, such as certificates issued by the Service and Payment Agency (ASP). “In the event of safeguard or reorganization or judicial liquidation proceedings, or in the employer’s financial difficulties, the indemnity is paid directly to the employee by the ASP, which gives the insured a document containing the necessary information on partial activity ”, recalls the Cnav.
What are the elements taken into account when calculating your retirement?
The quarters for partial activity are used to calculate your insurance period. They are used to determine whether you have reached the number of quarters necessary to obtain a full pension. This number differs depending on your year of birth. Thus, if you have validated 4 quarters for the partial activity, they will be counted as 4 quarters allowing you to get closer to the number necessary to benefit from a full retirement pension. On the other hand, the hourly partial activity allowance is not taken into account for the calculation of the average annual income because it is considered as a replacement income.
To understand what this means, it should be remembered that the amount of a private employee’s retirement is calculated by multiplying the average annual salary by the rate of the pension (50% if there is no discount or additional cost). Then, the result is multiplied by the employee’s insurance period compared to the reference period to obtain a full rate pension. Take the example of an employee born in 1959 who has contributed 167 quarters (number of quarters required to obtain a full pension) and having an average annual income of 40,000 euros. His annual pension will then be 20,000 euros (40,000 x 50% x (167/167)). The average annual salary is determined by calculating the average of the gross salaries during the 25 best years of the career. It is for this reason that the allowance is not taken into account. It could indeed be penalizing and would lower the average annual salary.
What consequences if you can benefit from early retirement for a long career?
In the case of early retirement for a long career (RACL), these periods of partial activity are added to the other periods of unemployment that you may have had during your career. As a reminder, the RACL allows you to retire before the legal age of 62 if you started working young, i.e. before the age of 20. To benefit from it, periods of compensated unemployment are taken into account, as well as those of partial activity from March 1. But be careful, no more than 4 quarters are taken into account. To clarify this system, the Cnav takes the example of a person who obtained a quarter deemed to have contributed for unemployment benefits after 1980 and who then had three quarters deemed to be paid for partial unemployment in 2020. In total, the 4 quarters will enter into the calculation of the insurance period to benefit from the long career scheme.
But, if to our example we add two new quarters deemed to have contributed to unemployment in 1990, the total of these quarters contributed reaches 6. They will therefore not all be able to enter into the calculation for early retirement for a long career. Only the 3 quarters for unemployment will be considered and only one quarter for partial activity.
What impact of partial unemployment for the accumulation of retirement employment?
If you are already retired, you can combine your retirement (basic and supplementary) with income from an activity. But the sum of the two must not exceed a certain limit which corresponds to the monthly average of your earned income for the last three calendar months preceding retirement or to 1.6 times the minimum wage (i.e. 2,487.33 euros gross in 2021) if this amount is more advantageous. If the two added together exceed this limit, the amount of the pension is reduced. In calculating earned income, replacement income is not considered. “Consequently, the compensation due for the partial activity, which takes the nature of a replacement income, must be neglected to assess the exceeding of the ceiling”, specifies the circular of the Cnav.
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