The remuneration of regulated savings will continue its momentum in 2023. Good news, while the financial wealth of the French – which amounted to 5,726 billion euros at the end of June, according to the latest available figures from the Banque de France – remains largely invested in life insurance, far ahead of regulated savings of the Livret A type, not to mention the hundreds of millions of euros dormant in current accounts. PEL, LEP, livret A… Update on the savings products that will rise in 2023.
- The housing savings plan (PEL)
The rate of return on home savings plans (PEL) signed from January 2023 will double to 2%, compared to 1% currently (and since 2016), the first increase in 22 years. This was announced on December 8 by the Ministry of Economy and Finance in a press release. The new rate will only concern PELs opened in 2023. Unlike those of other regulated products such as the Livret A, the rates of a PEL remain those in effect on the day of signature, allowing the holder to “block” a rate.
“This is new support for French savings after the rise in the rates of the Livret A and the Sustainable and Solidarity Development Booklet (LDDS), to 2%, and the Popular Savings Booklet (LEP), to 4 .6%”, specifies Bruno Le Maire, quoted in the press release. The Minister of Economy and Finance has followed the recommendation of the Governor of the Banque de France, François Villeroy de Galhau, in charge of calculating the new rate each year by December 5 at the latest.
The PEL is a hybrid product: it is used to build up savings for the purchase of real estate or the carrying out of work, then to finance this project. It therefore displays two rates: a first defining the remuneration of the savings deposited there (1% gross since August 1, 2016) and a second blocking a borrowing rate, 1.20 points higher (since February 1 2015), for the next 15 years. At the end of 2021, the number of PELs stood at 12.2 million, according to data from the Banque de France, for a total outstanding amount of 296.1 billion euros.
The passbook A rate will also increase. It will be in February 2023, as indicated by François Villeroy de Galhau on Friday December 9. “On the Livret A rate, there is a formula that combines interest rates and inflation rates, so there have already been two increases this year. We went from 0.5% to 2%. (Editor’s note: in August 2022) There will be a new increase at the beginning of February, which will be calculated in mid-January”, explained the governor of the Banque de France on France info. According to expert estimates, the passbook A rate should reach 3% at that time, or even 3.2%.
The livret A is often presented as the preferred placement of the French since 55 million have one. But with 368.5 billion euros at the end of October 2022, according to the latest score from the Caisse des Dépôts et consignations (CDC), its outstanding amount is five times lower than that of life insurance. In question ? A ceiling set at 22,950 euros, answer its detractors. Only 4.3 million people (7.8%) had, due to capitalized interest, exceeded this ceiling at the end of 2021, according to the annual report of regulated savings from the Banque de France. Livret A savings accounts are only filled with an average of 5,800 euros at the end of 2021, i.e. only a quarter of their capacity.
This product, guaranteed, tax-exempt and which makes it possible to recover its funds very easily, is looked at corner by the banks since the remuneration which they must serve weighs on their margins. This return is also better than many euro life insurance funds.
The French withdrew from their savings account A 1.1 billion euros more than they deposited in October 2022, a month traditionally not very favorable to savings, according to figures published on November 22 by the CDC. Despite this change in trend, after several months of record inflows caused by the rise in the rate to 2% on August 1, the month of October remains historically rather good.
The yields of the LEP or even the LDDS (dedicated to the social and solidarity economy) will also be on the rise on February 1, 2023. The remuneration of the LDDS, which follows the booklet A, should undoubtedly increase around 3%. The LEP rate could exceed 6%.
Currently, 7 million people hold an LEP, open subject to means testing and limited to 7,700 euros. Something relatively rare, the LDDS meanwhile experienced positive net inflows in October, at 290 million euros.