What do you want to know?
Why take out a PER?
PER is a long-term savings product. It allows you to save, within an advantageous tax framework, during your working life, to obtain, from the retirement age, a capital or a annuity .
The plan gives rise to the opening of a securities account or to the subscription to a group insurance contract.
The PER also makes it possible to develop capital, which is expected to grow over the years.
This capital can be released under certain conditions. Thus, in the event of a life hazard (indebtedness, end of unemployment, disability, etc.) or, more fortunately, to acquire your main residence, it is possible to release all or part of the capital placed on your PER.
One of the advantages of the new Retirement Savings Plan is the possibility of saving at your own pace.
The individual PER is mainly intended for savers whose marginal tax rate is at least 30% during the savings phase and more moderate after the cessation of activity.
Finally, the PER comes above all to standardize the multitude of solutions offered until now depending on the profile of the saver. Therefore, if the PERP, Madelin and other PERCO and Article 83 contracts continue to be marketed until the end of the year, they will cease to be so from 2021.
There are three types of PER: individual PER (Perin), collective PER (Percol) and categorical PER (Percat).
PER: A valuable tool for tax exemption
& build up a retirement
What is a retirement savings plan (PER)?
The retirement savings plan (PER) is a long-term investment allowing a saver to build up additional income for retirement. In return for a capital blocked until retirement, the PER offers its holders a certain tax advantage allowing them to achieve substantial tax savings.
Available since October 1, 2019, the PER replaces the old retirement savings products and comes in three different forms, namely 1 individual PER, and 2 corporate PER.
The individual PER replaces the PERP and the Madelin contract.
The collective enterprise PER replaces the PERCO.
The compulsory company PER succeeds the article 83 contract.
This new retirement savings system has many advantages. It is more flexible in terms of output since several choices are possible. The savings mobilized can be recovered early in the event of life accidents (death, disability, over-indebtedness, end of unemployment rights, compulsory liquidation) and also for the purchase of a main residence.
The PER holder has the choice between:
Exit in capital in one go, via a single payment.
Exit in capital in a fractional manner.
Exit partly in capital then the rest in life annuity.
The main objective of the Retirement Savings Plan is to increase the attractiveness of long-term savings and to orient it towards corporate financing.
Opening of the contract
The individual PER is open to everyone. You can subscribe to it with a financial institution or an insurance organization.
The collective company PER is a plan open to all employees of a company, with no subscription obligation.
The mandatory company PER is a plan open to all employees of a company or reserved for certain categories of employees. The employees concerned have the obligation to subscribe.
The new PER is accessible to any private individual, tax resident in France, regardless of age or income. Opening your PER is like taking out a multi-support life insurance policy.
Much the same way as a life insurance contract, the management of your PER will result from your personal choice.
The PACTE Law did not impose any restriction in terms of minimum or maximum age for opening a PER. However, the insurer may provide for a subscription age limit.
Thus, some insurers set age limits such as SwissLife at 75 years. In addition, the PER can be opened by a minor child.
End of the contract
When retirement age is reached and the subscriber has not previously opted for the life annuity, he can request that the savings accumulated in his PER be paid:
either in capital,
either in annuity
or partially in capital and annuity.
The death of the holder results in the closure of the plan.
The sums saved must be paid back to the heirs or beneficiaries designated in the contract, in the form of capital or annuity .
If it is a plan opened in the form of a securities account, the savings are integrated into the succession.
If it is a plan which gave rise to the adhesion of a group insurance contract, the amounts saved must be paid to one or more beneficiaries designated in the contract, according to the rules of life insurance.
In the event of death after age 70, the portion of the sums paid into the insurance contract that exceeds € 30,500 is subject to inheritance tax.
The sums you invest in employee savings plans are unavailable for a certain period of time. However, in certain exceptional situations, you have the right to recover all or part of these sums before the scheduled term.
The PER contract can be canceled when the insured:
Has reached the legal retirement age.
Is in one of the situations of force majeure allowing an early redemption
Renounces his contract within 30 days of signing.
Taxation
The sums paid into a PER during a year are deductible from taxable income for that year, within the limit of an overall ceiling set for each member of the tax household.
The limit is equal to the higher of the following 2 amounts:
10% of professional income for 2020, net of social contributions and professional costs, with a maximum deduction of € 32,909,
or 4,114 whichever is greater.
Note: the tax deduction of your payments is optional, that is to say, you can refuse it.
In this case only, you will not be able to save on your taxes, but instead, you will benefit from a softer tax at the exit of your PER.
You have deducted the PER payments from your taxable income
Annuity withdrawal: The annuity paid when the PER is released is subject to income tax, in the category of pensions and retirement, and to social security contributions at the rate of 17.2%.
Capital outflow: The share of capital corresponding to voluntary payments is taxed on the progressive income tax scale, but not on social security contributions. The share of capital corresponding to the products generated by the contract is subject to a flat-rate deduction of 30%, corresponding to 12.8% for income tax and 17.2% for social security contributions.
You have not deducted PER payments from your taxable (active) income
Annuity withdrawal: The portion of the annuity corresponding to your voluntary payments or exempt income is taxed according to the rules applicable to life annuities against payment. Social security contributions apply at the rate of 17.2% after an allowance calculated according to your age. The remaining part of the annuity is taxed on income tax in the category of pensions and pensions and on social security contributions at the rate of 17.2%.
Capital outflow: The share of capital corresponding to your voluntary payments or from exempt income is not subject to income tax or social security contributions.The share of capital corresponding to the products generated by the contract is subject to a levy flat rate of 30%, corresponding to 12.8% for income tax and 17.2% for social security contributions.
Transfers
Retirement savings products existing before October 1, 2019 (Popular retirement savings plan - Perp, Madelin contract, Préfon, savings plan for collective retirement - Perco, mutual pension supplement - Corem, hospital retirement supplement - CRH, contract article 83) can be transferred to the individual PER.
The savings accumulated on the individual PER can be transferred to all other PER. The transfer is free if the product has been held for at least 5 years. If it is held for less than 5 years, the transfer fees may be charged, up to a limit of 1% of the accumulated savings.
Savings availability
The individual PER is funded by the voluntary payments that you make or by the various transfers (PERCO, CET, etc.)
The collective enterprise PER is funded with the following amounts:
Voluntary payments
Amounts from profit-sharing
Amounts from participation
Rights registered in a time savings account (CET)
In the absence of CET, amounts corresponding to days of rest not taken, up to a limit of 10 per year.
The sums paid into the compulsory company PER are blocked until retirement.
However, you can recover your savings early, in particular in the following cases:
It is possible to recover your capital savings early in the following cases:
Disability of the holder, their children, their husband or wife or their PACS partner
Death of the spouse or PACS partner
Expiration of unemployment benefit rights
Over-indebtedness (in this case, it is the over-indebtedness commission that must make the request)
Cessation of self-employed activity following a judicial liquidation judgment
Acquisition of the main residence (except for rights resulting from compulsory payments).
Note: The tax deduction of voluntary taxable income payments is all the more interesting when the taxpayer saving is placed in the highest tax brackets.
Contract support
Managed management attracts many savers because of its flexibility.
In fact, unless otherwise specified by the subscriber, the management of the sums paid into the PER is done according to the principle of managed management.
When retirement is a long time away, savings can be invested in riskier and more profitable assets.
As retirement age approaches, savings are gradually oriented towards less risky vehicles.
The managing body informs you at the time of the opening of the PER on the characteristics of the plan, its mode of management and its taxation.
Thereafter, each year you will be informed
the evolution of the account,
the financial performance of investments,
the amount of fees charged,
and the terms of transfer of the plan.
Since October 1, 2019, a new long-term savings product has been available for individuals: the individual retirement savings plan (PER)
Since October 1, 2020, the old retirement savings products cease to be marketed and are therefore replaced by the PER, created by the Pacte law.
It is aimed at all savers. It aims to relax and harmonize the existing retirement savings systems.
When you retire, the PER allows you to choose an exit in annuity or in lump sum, or both at the same time. The cases of early release of savings are harmonized, authorizing the early withdrawal of savings with a view to acquiring their main residence.
The sums paid into a PER during a year are deductible from the taxable income of that year, within the limit of an overall ceiling set for each member of the fiscal household .
When the retirement age is reached and the subscriber has not previously opted for life annuity , he can request that the savings accumulated in his PER be paid:
Either in capital,
Either in annuity
Or partially in capital and annuity.
If you have opted for the deduction of your payments from your taxable income during your working life:
An annuity will be taxed according to the tax rules inherent in retirement pensions and other pensions, namely according to the income tax scale
With a capital outflow, it is the share of capital that corresponds to the payments you made on your PER that will be taxed, also according to the progressive scale of the IR, without any deduction.
The products generated by your PER, for their part, are subject to the Flat Tax or the taxation at the IR scale.
If you have not opted for the deduction of your payments from your PER:
An annuity payment will see the part of the annuity that corresponds to these payments be taxed according to the rules inherent in life annuities for consideration. The remaining part of the annuity is taxed on income tax in the category of pensions and pensions and on social security contributions at the rate of 17.2%.
With a capital outflow without deductions from your payments, you are entitled to a tax exemption on the part of the sums received which correspond to the payments you have made.
The products generated by your PER, for their part, are subject to the Flat Tax or the taxation at the IR scale.
Advantages & disadvantages Retirement savings
Retirement Savings Plan
Example of use of PER:
Life insurance or PER?
1
Initial situation
Olivier and Sophie are married under the legal community regime.
Olivier is an executive, is 45 years old, he will retire in 20 years.
The couple is taxed at a marginal tax rate of 30%.
2
If PER request
Olivier subscribes to a PER and places:
€ 10,000 per year for 20 years (i.e. a higher amount thanks to the deduction of premiums paid on the PER),
with an annual return of 3%.
In 20 years, at the time of retirement, the capital constituted is € 268,000. Olivier recovers his capital savings over 20 years. He therefore receives an annual capital:
from € 18,061 gross,
i.e. € 12,643 net of tax
At the end of the PER, the capital accumulated on the PER is significant, thanks to the reinvestment of the tax savings achieved, and compensates for this taxation.
3
Conclusion
* The return, net of taxation, of PER would be even higher compared to life insurance, if the couple had been taxed at 45%.
In conclusion, through the tax advantage on entry, the PER allows to withdraw a return, net of taxation, higher than a life insurance contract for example.
