The individual retirement savings plan (PER) is finding its audience. Four years after its launch, 3.2 million French people have such an envelope – a number including a good third of transfers of old products: popular retirement savings plan (PERP) and Madelin contracts. Financial institutions, led by banks and insurers, are also rolling out the red carpet for this rather simple to understand system.
Once the plan is opened with a first payment of a few hundred euros, the idea is to save throughout your working life. There is no obligation to contribute every year, although it is recommended to set up regular payments to hope to reach sufficient capital in the long term. Once you retire, you recover your savings in the form of a life annuity or by paying a capital sum in one or more installments. But again, there is no constraint: you can let your money continue to grow in the PER for as long as desired.
Another point to keep in mind: before reaching the legal retirement age, all the savings paid are irrecoverable. This blockage is considered beneficial by many professionals, to the extent that it prevents you from recklessly dipping into your nest egg. Certain exit routes are nevertheless provided, in the event of life accidents (disability, death of a spouse), financial difficulties (over-indebtedness, end of unemployment benefits, cessation of a self-employed activity after judicial liquidation) or purchase of your main residence.
Simplicity at the rendezvous
To encourage saving on this system, the government has provided a tax carrot. Payments are deductible from taxable income, up to the ceiling of 10% of professional income from the previous year (themselves limited). For 2023, the maximum authorized is 32,909 euros (more for self-employed people who have a specific ceiling). “This tax advantage on entry constitutes the main attraction of the PER, points out Marie-Noëlle Auclair, solutions director within the consulting company Eres. However, given the blocking of savings from the product, it is necessary at least be taxed in a marginal tax bracket of 30% to be interested in it.” Illustration: if you are in the 30% bracket, 4,000 euros housed in a PER allows you to save 1,200 euros in income tax. “Tax efficiency will be maximum for a person in the 41% and 45% brackets whose income will decrease in retirement,” continues the expert. Indeed, at that moment, the capital withdrawn will be taxable, which means that you could then give back with one hand what was earned with the other. Note that it is possible not to opt for the deduction of payments, which avoids exit taxation (except that of capital gains). But the device then loses a little of its flavor…
The other innovative element of the PER concerns savings management. Here too, simplicity is there since, by default, your assets are included in a so-called “horizon” formula. In short: the manager invests your savings in a cocktail of equity and bond funds (or even guaranteed euro funds), all in different doses depending on your age and your temperament (prudent, dynamic, etc.). Logically, it makes everything more secure as you approach the end of your working life. Attractive, this operation however masks very variable content depending on the contract. However, it is possible to deviate from this, by opting for a selection of freely managed financial supports which it is then up to you to manage. It’s up to you to know if you have the skills.