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End-of-career indemnity (IFC) simulator: commitment and provisioning
Every company must pay an end-of-career indemnity (IFC) to employees who retire, set by the Labour Code or the collective agreement in months of salary according to length of service. This employee commitment, often overlooked, can amount to large sums that fall due all at once when people retire and weigh on cash flow.
The IFC is due on every retirement
On the balance sheet, often underestimated by business owners
Deductible payments and a future charge secured and smoothed
The simulator
Estimate your IFC commitment
The simulator estimates the indemnity per employee and the total commitment according to length of service. Your data is neither stored nor transmitted.
End-of-career indemnity (IFC) simulator
Estimate the retirement indemnity owed to your employees and the employee commitment to provision.
Indicative calculation, based on 2026 rules and the assumptions entered above.
Why
Why the IFC is the hidden debt on the balance sheet
The retirement indemnity is not optional: it is an obligation. Set by the Labour Code or, more generously, by the collective agreement, it is expressed in months of salary according to the employee's length of service. For a loyal employee, it can reach several months' pay. Multiplied across all upcoming departures, it is a significant employee commitment that accounting standards require to be disclosed.
The problem is not so much the amount as its nature: it is a deferred charge, invisible in the current profit and loss account, which only materialises when people leave. Many business owners discover its scale late, when several long-serving employees leave within a short window and the indemnity falls due all at once, hitting cash flow at the worst moment.
It is precisely this mechanism — a real but deferred commitment, underestimated because invisible — that justifies dealing with it in advance. Ignoring the IFC does not make it disappear; it builds up silently on the balance sheet and resurfaces on the day the business owner is least able to absorb it. Provisioning and funding it gradually turns a charge you suffer into a charge you control.
What the calculation shows
The 3 levers this simulator highlights
The first step is to measure the true scale of the commitment: indemnity per employee according to length of service and the collective agreement, projected across the company's age pyramid. Many business owners have never done this calculation and, when it is set out, discover sums running into tens or even hundreds of thousands of euros. Putting a figure on the hidden debt is the precondition for any rational provisioning decision.
Taking out an IFC contract with an insurer lets you provision the charge gradually: the company pays regular premiums, deductible from its taxable profit, and the insurer pays the indemnity when the time comes. The charge is smoothed over several financial years instead of falling all at once, secured, and taken off the balance sheet. It is the opposite of the “we'll see when the time comes” approach, which exposes cash flow to the shock of departures.
The effectiveness of an IFC contract depends on how it is sized: population covered, assumptions on length of service, staff turnover and retirement date. An undersized contract leaves part of the commitment unfunded; an oversized one ties up cash needlessly. Calibration, based on realistic assumptions, is carried out with an adviser working with the chartered accountant — that is where the real relevance of the scheme is decided.
Case study
Case study: Catherine, 58, head of a 40-employee industrial company in Clermont-Ferrand
Catherine has never quantified her IFC commitment. Her company has 5 employees close to retirement, with an average gross monthly salary of €3,000 and an average length of service of 25 years. Here is what the simulator reveals:
| Indicator | Per employee concerned | For the 5 employees | Without an IFC contract |
|---|---|---|---|
| Average length of service at departure | ≈ 25 years | — | — |
| Estimated indemnity per employee | ≈ €15,000 | — | unprovisioned charge |
| Total commitment to fund | — | ≈ €75,000 | falls due at departure |
| Treatment with an IFC contract | smoothed premiums | deductible from profit | secured charge |
Running the numbers, Catherine discovers a commitment of around €75,000 concentrated on five departures close together — a charge that, without planning, would hit her cash flow in one go. By taking out an IFC contract, she smooths this charge over several financial years through premiums deductible from her profit, and the insurer takes over when the time comes. The hidden debt becomes a controlled charge, off the balance sheet.
The lesson for any business owner: the IFC does not disappear because you ignore it; it builds up and resurfaces at the worst moment. Quantifying the commitment, then provisioning it through a contract sized on realistic assumptions, turns a charge you suffer into an anticipated, deductible charge. It is a sound management reflex, too often postponed for want of running the numbers.
In practice
A debt you choose to control, or one that is forced on you
This simulator estimates the indemnity per employee and the total commitment according to length of service. But the decision is made upstream: should you provision through an IFC contract, and how should it be sized — population covered, assumptions on length of service and staff turnover? Well calibrated, the contract smooths an unavoidable charge, makes it deductible and takes it off the balance sheet; ignored, the commitment hits cash flow when people retire.
Balmont Conseil is a wealth management advisory firm based in Lyon, a member of ANACOFI-CIF, with no capital ties to any bank or insurer. Open architecture allows us to size the retirement indemnities (IFC) contract and select it from among our partners, working with your chartered accountant, in the service of your company. Let's book an appointment to quantify your commitment and secure this charge.
Frequently asked questions
What clients ask us.
Is the end-of-career indemnity mandatory?
Yes. The retirement indemnity is owed by the company to every employee who retires. It is set by the Labour Code or, more often and more generously, by the applicable collective agreement, in months of salary according to length of service. For an employee with long service, it can reach several months' pay.
Why is it called a commitment to provision?
Because the IFC is a deferred charge, certain in principle but future in its realisation. Accounting standards require this employee commitment to be disclosed. Many business owners underestimate it because it does not appear in the current profit and loss account: it builds up silently and only materialises when people retire, often several at the same time.
How does an IFC contract work?
The company takes out a contract with an insurer and pays regular premiums, deductible from its taxable profit. The insurer pays the indemnity when the time comes. Instead of falling all at once at departure, the charge is thus smoothed over several financial years, secured and taken off the balance sheet. It is the opposite of the “we'll see when the time comes” approach.
How do you size an IFC contract correctly?
Sizing rests on the population covered and the assumptions on length of service, staff turnover and retirement date. An undersized contract leaves part of the commitment unfunded; an oversized one ties up cash needlessly. Calibration, based on realistic assumptions, is carried out with an adviser working with the chartered accountant — that is where the relevance of the scheme is decided.
What is the difference between Balmont Conseil and a bank adviser?
Balmont Conseil is a wealth management advisory firm, a member of ANACOFI-CIF, with no capital ties to any bank or insurer. We quantify your commitment, size the contract and select it from among our partners, working with your chartered accountant. A bank adviser or insurance agent distributes their network's contract; we calibrate a tailor-made solution based on your actual assumptions, in your company's interest.
