Understanding ARRCO, AGIRC, and Contingency Fund Contributions

All employees in the French private sector, must contribute for their basic pension with the Social Security, and more specifically with the Retirement Insurance or the Mutualité sociale agricole. They must also contribute for their supplementary pension under the Agirc-Arrco scheme.

On 1 January 2019, the complementary retirement scheme for private sector employees was simplified with the merger of AGIRC (Supplementary Retirement of Executives) and ARRCO (Supplementary Retirement for Employees) into a single scheme, the AGIRC-ARRCO. The new AGIRC-ARRCO plan ensures the future of the supplementary pension. It strengthens the system and simplifies its management. Generally, all payees, except apprentices and trainees, are responsible for contributing to the AGIRC-ARRCO ARRCO or AGIRC funds.

Contributions to AGIRC-ARRCO and ARRCO/AGIRC are based on the same funding bases as for URSSAF and ASSEDIC, with one difference. Contributions that exceed part of the complementary contingencies contribution limits are included in the URSSAF funding base, but not in the ARRCO/AGIRC funding bases.

Since January 1, 2019 (date of implementation of the Agirc-Arrco scheme), employees, regardless of non-executive or executive status, contribute to the Agirc-Arrco scheme on their entire salary within the limit of 8 ceilings of Social Security. The Agirc-Arrco contribution system provides for two salary brackets and two contribution rates:

Tranche 1

• Upto the social security ceiling

• Rate= 7.87%

Tranche 2

• Between 1 and 8 times the Social Security ceiling

• Rate = 21.59%

Pursuant to past commitments, some companies apply contribution rates higher than those mentioned above.

The distribution of contributions is 60/40: 40% for the employee share and 60% for the employer share.

To these contribution rates are added: the general equilibrium contribution (CEG) and the technical equilibrium contribution (CET). These 2 contributions are split 40% by the employee and 60% by the employer. The CET applies to tranche 1 and tranche 2 for any employee whose remuneration exceeds the social security ceiling.

The Agirc-Arrco pension funds also collect, on behalf of the Association for the employment of executives (Apec), a contribution at the rate of 0.06% salary share: 0.024%; employer's share: 0.036%) on executive salaries, within the limit of four Social Security ceilings.

Starting from January 2023, URSSAF will be in charge of collecting these deductions and distribute them to the corresponding organism.

It was originally scheduled for January 2022, but it was delayed until 2023.

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/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 ARRCO/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/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.