Retiring with all its quarters becomes a real headache for many French people. Long studies, late career starts, periods of unemployment or incomplete professional activity can reduce the contribution period necessary to benefit from a full pension. To avoid a sometimes significant discountsome policyholders then choose to buy back quarters. A still little-known possibility, but which can allow you to save several months, or even several years before retirement.
However, the system remains complex and often expensive. The price of a buyout depends on age, income and the number of quarters concerned. In some cases, the bill can exceed 30,000 euros. “It is obviously not an obligation, it is up to everyone”recalls Philippe Crevel, economist and director of the Cercle de l’Épargne. Before getting started, it is therefore essential to understand precisely the rules of the system and to assess its real profitability.
How many quarters can you buy back for retirement?
The system allows you to buy back up to 12 quarters maximumthe equivalent of three years. These redemptions mainly concern years of higher education validated by a diploma or certain incomplete years having generated less than four quarters of contributions. The goal is generally to reach the necessary number of quarters more quickly to go at full rate or reduce the discount applied to the pension. However, not all policyholders are affected in the same way: some will only need a few additional quarters while others will have to complete several entire years.
Redemption remains entirely optional and must be studied on a case-by-case basis. A person who already has the necessary number of quarters obviously has no interest in carrying out this operation. Conversely, an employee who wishes to retire earlier can find a significant advantage. “There is no point in buying back three years if two years are enough”underlines Philippe Crevel. For example, a policyholder who would normally leave at age 66 but wishes to stop at age 64 will sometimes only need eight additional quarters to reach their objective.
How much does a quarter buyout actually cost?
The cost of a buyout depends on several criteria: the age of the applicant, their professional income and the option chosen. Because there are two types of redemptions. The first corresponds to the redemption “on account of the rate alone”. It makes it possible to reduce or eliminate the discount applied to the pension, without increasing the number of quarters taken into account for leaving earlier. The second, called redemption “under the rate and duration of insurance”is more advantageous but also more expensive: it improves both the retirement liquidation rate and the number of quarters validated to advance the retirement age. “The combination of retirement and pension makes the formula attractive”underlines Philippe Crevel, who believes that the “rate and duration” formula is often the most interesting for policyholders really wishing to advance their retirement.
The older the insured is and the higher his income, the higher the cost. “It can go up to more than 8,000 euros per quarter »specifies Philippe Crevel. For a 58-year-old senior executive wishing to buy back four quarters, the bill can exceed 30,000 euros. Conversely, a younger worker with modest income will pay significantly less. This price difference explains why some policyholders consider buying back very early in their career, even if this strategy also involves an element of risk linked to future pension reforms.
At what age does repurchase become interesting?
In theory, making a buyout at a young age remains financially more advantageous since the cost gradually increases with age. But this logic comes up against a major difficulty: no one knows precisely the future retirement rules. Successive reforms may modify the legal age, the number of quarters required or the methods of calculating pensions. “If you are 35 years old, the uncertainty regarding the legislation remains significant. If you are 55 or 57 years old, the hazard becomes much lower”specifies Philippe Crevel.
This is why the expert today considers that “redemption becomes especially relevant at the end of careerwhen the insured person knows precisely his situation and the exact number of missing quarters. » The problem is that at this age, the cost of repurchase often becomes much higher. You must therefore find a balance between visibility on your future retirement and the cost of the operation. Some policyholders therefore prefer to wait until their last years of activity in order to carry out precise simulations before making their decision.
Is quarter buyback really profitable?
Profitability depends entirely on the profile of the insured and his objectives. The buyout becomes particularly interesting when it makes it possible to avoid several additional years of work or to eliminate a significant reduction in the pension. “The combination of retirement and pension makes the formula attractive”explains Philippe Crevel. In practice, the real benefit of the system often lies in the possibility of leaving earlier rather than simply in increasing the amount of the pension.
If the objective is only to slightly improve your retirement, other solutions can sometimes be more interesting. “If you only play on the amount of the pension, you could invest this money in a PER and it could be more interesting »estimates the economist. Life expectancy in retirement must also be taken into account. : the longer this is, the more financially profitable the buyout can become. Conversely, a person who continues to work several years after having reached the full rate risks never really amortizing their investment.
A tax advantage often forgotten by policyholders
One of the great advantages of buying back quarters remains its tax advantage. The amounts paid are fully deductible from taxable income.. “If you pay 12,000 euros to buy back quarters, these 12,000 euros will be deducted from your taxable income”recalls the specialist. This advantage can considerably reduce the real cost of the operation, particularly for taxpayers subject to the highest tax brackets.
In fact, a highly taxed taxpayer can recover several thousand euros thanks to this tax deduction. This is why the expert recommends carrying out this type of redemption during years when incomes are particularly high. Conversely, making a purchase during a period of unemployment or low income greatly reduces the tax benefit of the system. Here again, the timing of the operation therefore plays an essential role in its overall profitability.
In which cases is repurchase not recommended?
Buying back quarters is not suitable for all profiles. A person who already has enough quarters to go full rate obviously does not have no interest in committing several thousand euros to this operation. In the same way, an employee who plans to work beyond the age of 67 risks naturally contributing long enough to reach the required number of quarters without needing additional redemption.
“For someone who is not sure if they want to leave before age 67, it is sometimes better to favor a financial investment “, believes Philippe Crevel. The buyout therefore remains a very personal decision which requires precise calculations and overall reflection on one’s future retirement, its taxation and its initial objectives. Before taking any action, specialists generally recommend carrying out several simulations with Retirement Insurance or a specialist advisor.
