Your pension will follow the increase in the minimum wage, here’s why
Until 2023, small pensions were generally indexed to inflation. This allowed an annual revaluation to maintain the purchasing power of retirees. But the pension reform has changed the situation. From now on, the small pensions are pegged to the minimum wagethat is to say they follow the same increases as the minimum wage.
Why is it important? The minimum wage tends to increase faster than inflation. In 2024, for example, an increase in 2% of the minimum wage is already planned, which automatically leads to an increase in the value of small pensions. Result : your pension should increase more significantly than in the past.
A concrete example: How much more will you earn?
Let’s take the example of a person who receives a minimum pension called minimum contribution. This amount, set at 85% of the net minimum wagewill automatically follow each revaluation of the SMIC. If the net minimum wage increases to 1 426,67 € in November 2024, the minimum pension will be adjusted accordingly.
For a pension which was 847,57 € before the reform, you could see a gain of several dozen euros each month. This increase is crucial for retirees who have contributed their entire career on low salaries.
Catch-up for 850,000 retirees: how is it going?
If you are one of the retirees affected, you may have already heard of the catching up in progress. Indeed, 850,000 people are affected by this measure, and if you have not yet received this upgrade, it is on the way.
In 2023, only new retirees were able to benefit from the increase in pensions indexed to the SMIC. This year, retirees already in place will receive a catching up on amounts owed since September 2023. It is therefore not only a monthly increase, but also an exceptional payment that awaits you.
Monitor your statements
Your pension could increase from October 2024. Remember to check your pension statements to ensure that the catch-up has been carried out and that the monthly increase is taken into account. If you notice a discrepancy or error, contact your pension fund to clarify the situation.
An even greater impact if the minimum wage continues to increase
One of the strengths of this reform is that it offers lasting protection against the erosion of purchasing power. With each revaluation of the SMICsmall pensions will follow suit. And economic projections indicate that the minimum wage could rise further, especially if inflation picks up.
Retirees who receive increased minimum contribution (for those who have contributed more than 120 quarters) also benefit from this automatic revaluation. Thus, each January 1your pension will be readjusted according to the minimum wage of the previous year. Excellent news for retirees who wish to maintain their standard of living in the face of rising prices.
Some tips to maximize this effect on your pension
Even if this revaluation is good news, it could have consequences indirect impacts on certain benefits you receive. For example, if you benefit from thesolidarity allowance for the elderly (Aspa)this increase in your pension could slightly reduce your Aspa, because it is calculated based on your overall resources.
It is wise to check with your pension fund whether other allocations are affected. This will allow you to have a clear vision of your future resources.
In 2024, the increase in the minimum wage offers a real boost to retirees receiving small pensions. Thanks to the 2023 reform, each increase in the SMIC leads to an increase in minimum pensions, guaranteeing you not lose purchasing power. With the new rule, you may see your pension continue to rise in the years to come.
Don’t forget to monitor your payments and be on the lookout for upcoming revaluations to maximize the benefits of this reform!
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