Understanding ARRCO, AGIRC, and Contingency Fund Contributions

Both the ARRCO and AGIRC manage pension funds. Each comprises employer and payee contributions. Most payees, except for apprentices and trainees, for example, are liable for contributions to ARRCO or AGIRC funds.

Contributions to ARRCO and AGIRC are based on the same funding bases as for URSSAF and ASSEDIC, with one difference. If the employer contributions for retirement and contingency submitted to URSSAF exceed 85 percent of the social security ceiling A (or 19 percent for the contingency only contributions), the part of the contributions over the ceiling is included in the URSSAF funding base but is not included in the ARRCO and AGIRC funding bases.

Because contributions paid to the Association Pour l'Emploi des Cadres (APEC) are first paid to AGIRC and then paid to APEC, they are managed with the other AGIRC contributions. These include lump sum APEC contributions and the APEC contribution base on slice B.

Because Contribution Exceptionnelle Temporaire (CET) and AGFF contributions are paid to AGIRC, it is also managed with the other AGIRC contributions.

Contingency funds supplement the standard social security (URSSAF) payments. There is a single mandatory payment, paid by all companies, for employees categorized in Article 36 or Article 4/4 bis. All other payments are voluntary. Each organization deals with contingency contributions in its own way and needs to set up its own rules to handle its calculations.

Global Payroll for France uses rates, limits, and ceilings to determine ARRCO, AGIRC, and contingency contributions. PeopleSoft delivers this data, but you should verify it before proceeding with ARRCO, AGIRC, and contingency processing. You should:

• Use the Rates/Elements/Limits FRA component to view the variables and limits used to calculate the contributions to these funds.

• Use the Ceilings FRA component to view the monetary value of these limits, which the system uses to calculate the funding bases for ARRCO, AGIRC, and contingency contributions.

• Use the ARRCO/AGIRC Rt FRA component to enter the numeric values for the various ARRCO and AGIRC contribution rates.

  The ceilings appearing on this page are dynamically displayed based on the values on the Ceilings page. For example, if you enter a new ceiling on the Ceilings page, the ceiling data also changes on the AARRCO/AGIRC Rt FRA component.

• Use the Pension/Contingency Contract page in the HR application to enter contribution rates for contingency funds directly in the contingency contract.

The government sets the annual social security contribution ceiling. If the employer contributions to contingency funds and additional pension funds (ARRCO and AGIRC) are less than 85 percent of the annual social security ceiling, then these contributions are exempted from social security contributions. If the employer contribution to contingency funds is less than 19 percent of the social security ceiling, these are also exempt from contributions. If both the 85 percent limit and the 19 percent limit are exceeded, the largest excess amount is added to the URSSAF and ASSEDIC accumulators and reintegrated into the social security base. This has no impact on the pension fund contribution.

Three calculations are required to determine the limits:

• Contributions to contingency funds and additional pension funds are checked against the limit of 85 percent of the annual social security ceiling.

  Any excess is paid into the social security base.

• Contributions to contingency funds only are compared to 19 percent of the total funding base.

  Any excess is added to the social security and ASSEDIC funding base.

  Note: If both the 19 and 85 percent limits are exceeded, only the largest excess amount is reintegrated into the social security and ASSEDIC base.

These calculations are performed by the PRV FM REINT SOCIA formula, which is triggered by the PRV SE SOCIAL section. This formula performs the calculation for departing employees or during the month of December.

For a temporary period (for years beginning on 1 January 2004), two methods must be used to calculate taxes on contingency and additional pension funds. The method that calculates the smallest amount is the one accepted as the true calculation, and the smallest amount is the one reinstated in the taxable salary.

• The first methods calculates the exemption limit once a year, in the case of departure, or in December. It is triggered at the same time as the 19 and 85 percent exemptions.

• The second method:

  • Calculates a ceiling equal to 7% of the annual social security ceiling plus 3% of the payee's yearly compensation. This ceiling is limited to 3% of 8 times the annual social security ceiling.

  • Compares the yearly contributions to the contingency funds to this ceiling. The amount of contributions over the ceiling is the amount to be reinstated.

The smallest amount calculated by these methods is the amount reinstated.