The deduction ceiling, and what eats into it

The retirement savings deduction ceiling is worth 10 % of income from work, with a floor of 4 710 € and a cap of 37 680 €. Between those two, four items eat into it, and most savers discover them only after they have paid in.

A floor, a cap, and a rate in between

Sums paid into a retirement savings product are deducted from overall net income, within a ceiling set for each member of the tax household. That ceiling is not a flat amount: it is computed on the income from work of the preceding year.

The ceiling belongs to each member of the tax household. A married or civil-partnered couple taxed jointly may ask, in their return, for their two ceilings to be pooled: one then uses the share the other has not consumed.

Both bounds derive from the annual social security ceiling: the floor is worth 10 % of it, the upper bound 10 % of eight times it. They therefore move every year, mechanically, without any separate decision setting either of them.

Four items that come off the ceiling

The figure obtained is not the amount available. Four items reduce it, all of them linked to retirement savings already funded elsewhere. It is the least known rule of the scheme, and the one that produces the most reassessments.

• Contributions to supplementary pension schemes made compulsory in the company, employer share untaxed and employee share deductible
• Contributions to optional schemes for the self-employed, excluding the fraction equal to 15 % of the profit share between one and eight times the social security ceiling
• The employer top-up to a collective or compulsory company plan, within the amount exempt from income tax, that is 7 419 €
• Rights held on a time savings account, or at most ten days of monetised leave, transferred into one of those plans

An employee whose company tops up its collective plan generously may therefore see the individual ceiling melt away. The voluntary payment believed to be deductible is then only partly so, and the excess brings no tax advantage at all.

The products concerned form a wide family: the individual retirement savings plan, the collective and compulsory company plans, the older popular and collective plans, plus three optional schemes — the civil service scheme, the mutual top-up and the hospital staff top-up.

Self-employed workers hold an option of their own. They may deduct their contributions from overall income like everyone else, or opt for a deduction on their professional income, in the industrial and commercial, non-commercial or agricultural profit category.

Reading the ceiling rather than recomputing it

The tax administration computes that personalised ceiling and prints it. It appears on the previous year's tax notice and on the income tax return itself. That figure is the one that governs, not a computation redone by hand.

The printed figure is not the ceiling of the year alone: it adds the ceiling computed on the previous year's income to the unused ceilings of earlier years. Reading it avoids confusing what is available with the annual ceiling.

Contributions paid to buy back retirement quarters follow separate conditions. They are deductible, but must never be counted among retirement savings contributions: the two envelopes are distinct and do not merge into one another.