Supplementary pension (Article 39): the principle, the end of uncertain rights, and the taxation of the annuity

A supplementary pension plan, or "Article 39" contract, is a group defined-benefit contract paid out as a lifetime annuity. It is taken out and fully funded by the employer, without any contribution from the employee.

Since July 2019, plans with variable benefits have been closed to new members: only contracts with guaranteed benefits can be marketed. For the beneficiary, a social security contribution is due on the annuity, which the tax authorities' guide treats in conjunction with pensions.

This page covers the principle, the end of variable-benefit pension plans, and the taxation of the beneficiary's pension. It does not address employer-related matters (social security contributions, deductions in company accounts) or the specific rules applicable to company officers.

The principle

According to the National Assembly's information report of 25/09/2024, "Article 39" contracts have three characteristics:

• These are defined benefit group contracts, the rights to which are paid in the form of a life annuity; ;
• They are subscribed to and fully funded by the employer, without any contribution from the employee; ;
• They are kept out of the retirement savings plan (PER).

The same report indicates that these contracts are aimed at attracting and retaining senior executives or managers.

Comparison with an Article 83 contract: according to the BOFiP (French Official Tax Bulletin), contributions to an Article 83 contract are mandatory and paid by both the employee and the employer. In an Article 39 contract, according to the report, the employer alone provides the funding.

What changed in 2019: the end of random rights

The following steps stem from the explanatory memorandum of Bill No. 2273 (September 27, 2019) and the legislative file of the National Assembly. The relevant ordinance is Ordinance No. 2019-697 of July 3, 2019, concerning supplementary occupational pension schemes.

The order also prohibits the introduction, in supplementary occupational retirement contracts, of a contingency linked to leaving the company.

Draft ratification law no. 2273 was tabled on 27/09/2019 and withdrawn by its author on 15/06/2022. This page is based on its explanatory memorandum, not on the text of the ordinance.

Annuities already in payment

The above restrictions concern membership and the acquisition of new rights. Pensions from supplementary pension schemes currently in service are subject to the beneficiary's social security contribution (Ministerial Response of 12/03/2024) and the taxation described below.

Contracts with guaranteed rights

Since July 2019, according to the information report, only defined-benefit contracts with "certain rights" can be marketed. The report describes the following characteristics:

• An annual limit. The rights accrued each year are capped at 3% of the beneficiary's remuneration. The total amount accrued, across all employers, cannot exceed 30 percentage points over the course of a career.
• A condition for implementation. A plan benefiting a specific category of employees can only be implemented if all employees are also offered a group retirement savings product. The beneficiaries must not belong to any objectively defined category of employees.

The explanatory memorandum for Bill No. 2273 describes something else: the ordinance creates a specific social security regime for guaranteed-rights schemes and subjects eligibility to several conditions related to the supplementary pension scheme. Among these are professional performance requirements for corporate officers. These conditions are not detailed here.

The legal text has not been reviewed for this page: these rules are reported as presented in these documents and should be verified before any decision is made.

Taxation of the annuity for the beneficiary

Income tax

The BOFiP (Official Bulletin of Public Finances) indicates that annuities acquired free of charge are subject to the same tax regime as pensions. Pensions and retirement benefits from a 10% allowance, subject to a minimum and a maximum. The BOFiP specifies that this allowance excludes life annuities acquired for valuable consideration.

The amounts come from the administration's brochure: for 2025 income, declared in 2026, the allowance is a minimum of €454 per holder and a maximum of €4,439 per household (IR 2026 brochure).

The BOFiP (Official Bulletin of Public Finances) does not mention Article 39. The comparison with a supplementary pension, fully funded by the employer, is an interpretation that should be confirmed in your file. The administration's brochure on pensions, retirement benefits, and annuities itself addresses the tax on supplementary retirement benefits.

The social contribution payable by the beneficiary

A contribution is payable by beneficiaries of supplementary pension schemes. The Ministry of the Economy justified this in a response dated March 12, 2024, as these beneficiaries do not contribute to the accumulation of their pension and are not taxed on employer-funded contributions. This contribution finances old-age and survivor's insurance.

Three points emerge from the sources consulted:

• the contribution is progressive, and annuities below a certain threshold are exempt; ;
• It is deductible from taxable income up to the amount paid for the first €1,000 of monthly annuity, therefore fully deductible for an annuity of €1,000 per month or less; ;
• According to the administration's brochure on 2024 income, when the amount is pre-filled in the declaration, this deduction is already made.

The current scale and exemption threshold are not covered on this page.

Numerical example (fictitious profile)

Situation. A former managing director received a supplementary pension in 2025 and declares it in 2026. He is the sole pension recipient in his household. For simplicity, we assume the pension is taxed as a retirement pension (this needs to be confirmed on his file, see above) and we isolate the 10% tax allowance across three levels of annual pension payments.

Issue. What is the effect of the allowance, with its minimum of €454 and its ceiling of €4,439 per household?

Strategy. The firm reviews with the beneficiary the reading of their tax return, their other retirement income and social contribution.

Result.

At €60,000 of annuity, the €4,439 ceiling applies: the allowance no longer follows the annuity.

The table isolates the tax allowance, excluding social security contributions and other household pensions. This profile is hypothetical: the figures illustrate the mechanism and do not predict the outcome for your specific situation.

What changes depending on your situation

• The closing date of your plan, with regard to the date of May 20, 2014.
• The nature of the contract: uncertain rights already in progress, or a contract with certain rights.
• Your status: employee, or corporate officer.
• The amount of the annuity, in relation to the minimum and maximum allowance.
• The amount of the monthly annuity, with regard to the limit of €1,000 for the deduction of the contribution.
• Your other pensions and household income.

This page does not show your tax liability in euros, which is calculated based on your individual circumstances. No results are guaranteed.