The retirement of auto-entrepreneurs raises many questions. How is it calculated, how to validate his retirement quarters, what will be the amount of future pension, whom to approach? Whether it is a current concern or a vague concept for young people, it is important to understand how it works. Zoom in on the retirement of auto-entrepreneurs!
How does self-employed retirement work?
As a self-employed individual, you obviously contribute towards your retirement like all employees. However, a major difference exists with employees: You only validate your retirement quarters beyond a certain turnover.
The auto-entrepreneur benefits from micro-social governance, i.e. you pay all your expenses to URSSF. These various contributions combined in a single declaration are called social packages. This specifically includes:
- old age insurance;
- health and disability insurance;
- maternity leave;
- training insurance;
URSSAF collects your expenses and is responsible for redistributing your contributions to the various organizations concerned. The old age insurance portion is therefore sent to the general plan or CIPAV and will be used to finance your basic retirement, or even your supplemental retirement.
Declaration of CA at 0 provides no payment of fee for self-employed individual, but also no old age contribution!
Verification of Retirement Quarters
Verification of retirement quarters is not automatic for self-employed people. In fact, working is not enough, you have to achieve minimum turnover. And it depends on the nature of your business. It is then possible to validate only part of the quarters of the calendar year.
|activity||1st quarter||2 quarters||3rd quarter||4 quarters|
|Provision of commercial and craft services BIC||€ 2,412||€ 4,239||€ 6,071||€ 12,030|
|commercial, housing, catering bic||€ 4,137||€ 7,286||€ 10,426||€ 20,740|
|Liberal BNC||€ 2,880||€ 5,062||€ 7,266||€ 9,675|
|Generous CIPAV||€ 2,280||€ 4,560||€ 6,840||€ 9,120|
Therefore, if you are a florist and your 2021 turnover is equal to €10,000, you only validate 3 quarters!
Are You Missing Retirement Quarters? You have the possibility to redeem them under certain conditions. You should contact your pension fund to submit your file and assess the relevance of the operation.
The minimum retirement age is the same for self-employed, self-employed and employees. So it is theoretically possible to terminate your rights by age 62. However, the retirement age depends on the number of quarters contributed at the top. And pension reform always keeps contributions several quarters high enough to benefit from your retirement at the full rate. Find below the number of quarters you need to retire according to your year of birth.
|year of birth||Number of Quarters to Validate|
|1973 and onwards||172|
As seen earlier, the recognition of auto-entrepreneur’s retirement quarters depends on your CA. So it can significantly change the age at which you will be able to terminate your retirement rights if your activity has experienced some ups and downs during your career.
What is a retirement fund for auto-entrepreneurs?
Despite the improvement of the RSI, not all self-employed people are dependent on the same pension fund. In fact, you may be affiliated with the General Scheme or CIPAV depending on your activity and the date of creation of your micro enterprise.
Are you a Merchant, Craftsman or Liberal outside CIPAV
You are dependent on the general rule. This means your retirement will be managed by CARSAT (Caisse d’Assurance Retraite et de la Santé au Travail) or CNAV (Caisse Nationale d’Assurance Vieillesse), depending on the municipality you live in.
General governance concerns merchants, craftsmen and liberal businesses outside the CIPAV. This last category is a bit more complicated. Indeed, from 1 January 2018, new auto-businesses created to exercise an unregulated liberal profession have been linked to the general regime.
Auto-enterprises created before January 1, 2018 are linked to CIPAV. You have the option of requesting to join the general scheme by December 31, 2023.
You are in a regulated liberal profession
Some regulated liberal businesses are affiliated with the CIPAV (Caisse Interprofessionnelle de Prevoyance et Assurance Vieillesse des professions liberal professions). You are concerned if you do one of the following:
- Architect, Interior Designer, Project Manager, Construction Economist, Surveyor or Consulting Engineer;
- high and medium mountain ski instructor, guide or guide;
- Specialist in court or automobile;
- conferral guide;
- The artist is not affiliated with the Maison des Artistes or Ageasa;
- Osteopath, dietitian, psychologist, psychiatrist, occupational therapist or chiropractor.
If you have made your self-employment liberal profession before 1st January 2018 then you are also dependent on CIPAV.
How to Calculate Auto-Entrepreneur’s Retirement?
Known to be complicated, self-employed person’s retirement calculations are not that complicated!
in general government
The calculation is (fairly) simple:
Average Annual Earnings × Rate × (Number of Valid Quarters / Reference Period)
Your annual retirement amount
To do your calculations, you need to know a few things:
- Average annual income is your best contribution over 25 years. These 25 turnovers apply to the flat rate deduction specific to your activity: 34% for eclectic activities, 50% for the provision of services and craftsmen, 71% for commercial activities.
- The rate is 50% (full rate) if you have met enough conditions or if you retire at 67. If you are missing quarters, this rate will be reduced accordingly.
- The basic pension is capped at 50% of the PASS or €1,714 per month.
Supplementary pension for self-employed persons under the general scheme
RCI, or Supplementary Pension for the Self-Employed, is calculated on the basis of a points system. The more you contribute, the more you accumulate. Like your original retirement, supplemental retirement will be complete only if you have validated enough quarters!
The calculation of marks is automatic and its value is re-evaluated every year. Thus, in 2021, you will accumulate 1 point for every € 17.765 contributed. When you retire, all your points are converted into Euros at the applicable service value. In 2021, the liquidation point is worth €1.208. Thus, the calculation of supplementary pension is as follows:
Number of Points Earned x Service Value
Annual amount of your supplementary pension
In CIPAV, a points-based retirement system is applicable for both the Basic Plan and the Supplemental Retirement. These last 2 are calculated as follows:
number of points earned x point value
To find out the amount of your pension in CIPAV, you have to do this calculation twice. Actually, the point value is different for basic pension and supplementary pension. In 2021, they are:
- € 0.5731 for the basic pension;
- 2.63 € for supplementary pension.
Then you get your retirement annual amount!
Unregulated liberal businesses registered after January 1, 2018 face a problem with contributions from liberal businesses. Indeed, the global flat rate of 22% does not give a distribution of contributions.
The National Association of Auto-Entrepreneurs relayed the draft decree specifying this distribution, and meaning there would be no contribution to the supplemental pension, suggesting a future increase if the decree comes in the past!
How do combined self-employment and employee retirement benefits work?
Do you mix salaried activity and self-employment? Your pension will be liquidated for each plan. As a reminder, you cannot deposit more than 4 quarters per year. Thus, the average annual income for your best 25 years is calculated on both your salaried activity and your self-employment activity.
At the time of liquidation, each plan indicates the number of valid quarters. To avail full rate pension, you must have contributed at least quarter to all the activities combined.
To find out what your rights are, you can consult the retirement insurance website, which brings together all of your known professional background in your personal space.
What is a Self Employed Person’s Retirement?
The amount of your full pension is equal to 50% of your average daily income.
How to Extend Your Self-Employed Retirement?
You can subscribe to an individual retirement savings plan or life insurance. By making regular payments throughout your career, you will be able to avail a supplementary pension after retirement.