Retirees’ purchasing power: what the new pension revaluation means

Between pension increases, tax reform and the raising of the minimum allowance, several measures are changing retirees’ budgets this year. A recent study also shows that a large majority of seniors perceive their purchasing power as weakened since they retired. Overview of the key figures to know.

A tiered revaluation of pensions

Basic pensions are revalued on January 1 according to a now-differentiated mechanism: pensions up to €1,500 per month benefit from a revaluation at 100% of observed inflation, while beyond that threshold the rate becomes tapered and can fall to as low as 50% of inflation for the highest pensions. Based on a projected inflation of 1.8%, a retiree receiving €1,000 per month would thus see their pension increase by about €18 per month. Supplementary Agirc-Arrco pensions follow a separate schedule, with a revaluation planned for November 1.

The end of the 10% tax deduction

A more discreet but concrete change on the tax return: the automatic 10% deduction (capped at €4,321 in 2025) is replaced by a fixed allowance between €600 and €800 per year. For a retiree receiving €3,000 per month, this means a tax saving halved, going from about €360 to €180 per year. This change mechanically affects higher pensions more, the former proportional deduction mainly benefiting higher incomes.

• ASPA (minimum old-age benefit) raised to €1,012 per month.
• CSG thresholds revalued to limit threshold effects and bracket changes.
• Medical deductibles maintained at their previous year’s level.
• Administrative objective: to process 90% of retirement applications in less than three months.

What retirees actually feel

Beyond the budgetary mechanisms, a survey conducted by CSA Research for a collective of companies promoting healthy aging, in partnership with Le Parisien, measures the sentiment: 67% of French people over 65 consider that their purchasing power has decreased since they retired, and 59% think the situation will worsen further. On average, respondents estimate that they are missing €531 per month to live “adequately”.

The sentiment varies greatly depending on family situation: retirees living alone estimate they are missing on average €438 per month, compared with €597 for retired couples. Housing status also plays an important role: tenants, who represent only a minority of retirees (owners make up about 74% of this population), bear an average monthly housing expense of €609, a budget item significantly heavier than for owners who have finished paying off their property.

A budget to monitor, item by item

These different measures combine differently depending on profiles: a modest retiree, below the €1,500 threshold, fully benefits from the full revaluation of their pension but is still affected by the increase of the ASPA if they receive the minimum old-age benefit. Conversely, a retiree with more comfortable income sees their pension less revalued and their tax advantage reduced, two effects that add up. In all cases, it remains useful to check one’s situation each year with regard to the CSG thresholds and applicable taxation, these parameters changing every January 1.

Frequently asked questions

How is the revaluation of basic pensions calculated?

Pensions up to €1,500 per month are revalued at 100% of observed inflation, while beyond that threshold the revaluation rate becomes tapered, down to 50% of inflation for the highest pensions.

What replaces the 10% tax deduction on pensions?

The proportional 10% deduction, capped at €4,321 in 2025, is replaced by a fixed allowance between €600 and €800 per year, which reduces the tax advantage for the highest pensions.

How much is the ASPA (minimum old-age benefit)?

The solidarity allowance for older persons is raised to €1,012 per month for a single person meeting the eligibility conditions.

Sources

Previssima — CSA Research study on retirees’ purchasing power
Skarlett — details of the social security budget measures for seniors

To explore further budget management, visit our sections Banking, Finance & Credit, Insurance & Mutual Health and Health & Medicine.