the lump sum would be favorable to the least affluent retirees

The lump sum reduction of € 2. Meanwhile, 000 for retirees, announced by the government for the 2026 budget, would benefit “Quite largely” to the least affluent households if it also applies to the calculation of housing aid, and would allow a budget gain of“About 550 million euros”according to the Institute of Public Policy (PPI). Therefore, “The transition to the reduction of € 2. Meanwhile, 000 is fairly redistributive, increasing the services and reducing the amount of tax due for less affluent retirees while increasing the tax rate for easier retirees”the IPP said on Tuesday July 29, which brings together researchers specializing in the evaluation of public policies.

As part of the next budget. However, the government wishes to establish a lump sum reduction of € 2,000 per year and per person for retirement pensions. A device that would replace the lump sum would favorable least 10 % reduction for professional expenses which currently benefit from retirees.

This 10 % reduction is also applied to the income declared to the family allowance funds. to calculate the eligibility for housing allowances. It is not yet known if the lump sum will also replace it in this case. “The application of the new reduction modality both to calculate income tax. that of housing aid would be strongly redistributive, while allowing an improvement in the budgetary balance of around 550 million euros”estimated the IPP. “On the contrary. an application only to the calculation of income tax would lead to revenue almost twice as large (around one billion euros), for a lesser redistributive effect and a large majority of losers to the reform”he said.

More winners than losers – Lump sum would favorable least

Currently, the amount deducted corresponds to 10 % of retirement pensions, with a maximum of € 4,399 (for income from 2024). The lump sum would favorable least change is without impact for tax households with € 20,000 in annual pensions (€ 40,000 for a couple).

Under this threshold, they will see their reduction increase. “They will therefore have income considered as lower. which are entitled to pay less taxes and to receive more social benefits, while it will be the opposite for tax households receiving more than € 20,000”detailed the IPP.

This would result in 1.5 million winners (9 % of retirees) thanks to social benefits against 1.4 million losers (8 %) due to the tax increase. If only the tax reduction mechanism is changed, this would be 100,000 winners respectively against 1.4 million losers.