French Retirement savings plan: what is PER?
A PER stands for Plan d’épargne retraite
The retirement savings plan (PER) is a new retirement savings system resulting from the Pacte law, available since October 1, 2019, and the only one marketed since October 1, 2020. It is a legal and fiscal envelope that allows to constitute a supplement to retirement, in addition to the compulsory plans. Investments made in a PER are in principle blocked until retirement, but cases of early release exist, to finance the purchase of one's main residence.
The PER has common rules in terms of management methods, transfer, early or late exit and taxation.
It is organized around three compartments:
compartment 1: supplied by voluntary payments (VV)
compartment 2: funded by employee savings plans (ES)
compartment 3: funded by compulsory payments (VO)
Compartment 1 corresponds to individual retirement savings, compartments 2 and 3 relate to corporate retirement savings.
Different types of financial institutions are thus able to offer a PER: insurers, asset managers, health insurance companies, pension funds.
Since the start of 2021, the PER in this new version is effective.
Pacte Law: why a new retirement savings plan?
The creation of the PER aims to harmonize the old systems within a common framework, in order to promote the development of funded retirement savings in addition to compulsory pay-as-you-go pension schemes. This is a universal savings product, whereas until now, the various products were aimed at specific audiences with specific rules
Mandatory PER Focus - For companies
The mandatory retirement savings plan is one of the two forms of a company retirement savings plan. The mandatory PER is intended for all employees of the company that has set it up or to one or more categories of employees (only executives, for example).
The mandatory PER is sometimes named PERO, PERob or PERcat (because it can be reserved for a category of personnel). It can be created:
by collective agreement
by referendum agreement (draft agreement proposed by the company manager ratified by the majority of those concerned)
by unilateral decision of the employer (DUE)
The mandatory company PER can be funded by the following payments:
voluntary payment of the employee (deductible or non-deductible as desired)
compulsory employee contribution
compulsory employer contributions
amounts from employee savings (if the mandatory PER is for all employees)
payments from the rights of the time savings account (CET)
transfers of sums from another PER
The employee's compulsory payments are deductible from his taxable income up to a limit of 8% of the annual income. The exit must be made as an annuity which is taxed as a retirement pension, except in the event of early release for an accident in life.
In conclusion, this device is quite innovative in French culture where most pensions operate on a pay-as-you-go basis, the aim of this reform being to turn to a retirement supplement by capitalisation in the form of a pension. Damien Mottet
Account Manager - Alexander Beard (France) SAS