With 7.4 million French people holding a retirement savings plan (PER) at the end of March 2023, for a total outstanding amount of 84.9 billion euros, the government is pleased with the success of the system.
Created by the Pacte law (action plan for the growth and transformation of businesses) of May 22, 2019, with the objective of simplifying and harmonizing the different retirement savings vehicles, the PER has found its audience. “This is not surprising, because it includes all the positive elements of the old systems, while providing additional favorable characteristics,” underlines Julien Male, deputy general director of Laplace, a private management consulting group.
Several factors have in fact contributed to this success, starting with the flexibility of the PER envelope to recover the sums saved there upon retirement.
Indeed, most of the products that previously existed, including popular savings plans (PERP) and Madelin contracts, provided for a compulsory withdrawal into a life annuity. From now on, great freedom is offered to the subscriber since he can opt for the annuity, a capital outflow (in one go or split) or even a combination of the two mechanisms.
Tax exemption tool
Another favorable element: the possibility of deducting payments made from taxable income. Because it reduces the tax base, the PER is a powerful tax exemption tool. And the more you are taxed, the greater the impact. As a result, the PER is particularly suitable for wealthy households.
Be careful, however, this is a deferral of taxation since the capital which will be withdrawn from the envelope once upon retirement will be taxed: the sums corresponding to the payments will have to be reintegrated into the taxable income at the progressive scale and the winnings will be subject to “flat tax” (currently 30%). But whatever, better a tax in ten or twenty years than today…
Finally, the creators of the solution have integrated – in addition to cases of early release for life accidents – a possibility of early exit for the purchase of a main residence. Although this scenario is not very interesting from a tax point of view (the sums are subject to tax), it is nonetheless reassuring for young savers who subscribe to this product before becoming owners.
If the PER is now the only product dedicated to anticipating retirement, there are nevertheless several variants of the system.