“PER” or the success of this French capitalization retirement savings plan

Public spending the government pinned down by the HCFP

Bercy is delighted, and there is reason. The Ministry of Economy and Finance welcomed on Wednesday the development of the retirement savings plan (PER), a funded retirement product resulting from the Pacte law of 2019, one of the objectives of which was to overhaul this financial product.

The PER now totals 7 million customers, for 80 billion in outstandings at the end of 2022. “The reform of the PER […] is a great success: we have more than doubled our PER distribution target at the end of 2022, with more than 7 million French people equipped”, welcomed Bruno Le Maire in a press release.

When the system was launched, Bercy was counting on a target of 3 million subscribers by the end of 2022, with an outstanding amount expected to reach 50 billion euros. “This dynamic concerns both corporate, collective and mandatory PERs, which total 31 billion euros in outstandings, and individual PERs, which reach 49 billion euros in outstandings and more than 3 million holders. “, details the press release from Bercy.

Less and less risky

The retirement savings plan appeals in particular because it is a long-term investment, the payments of which are free. It is only released from retirement age, but can be released exceptionally in very regulated cases, such as disability, over-indebtedness, expiry of unemployment insurance rights. At the time of departure from the world of work, the beneficiary can choose to receive the money in the form of an annuity, or directly in capital, with high taxation. This second scenario is an innovation of this product, compared to previous contracts.

The device has several other advantages over its competitors. It is completely portable, and can therefore be transferred from one company to another, in order to adapt to changing career paths. But it can also be very volatile in some cases. Investments are generally riskier for younger clients. Before the age of 40, the majority of payments are invested in units of account (UA), which represent riskier investments, but offer a higher potential return in good years.

A windfall for insurers

Investments in retirement savings plans are delegated to insurers, for whom it is a real godsend. The funds are blocked for the very long term, and most investments are subject to the vagaries of the markets. It is therefore an important generator of commissions. Despite these constraints, the final capital remains guaranteed.

At the time of its launch, the device had created controversy. Its opponents accused it of being a first step towards the development of funded pension systems. Its operation is indeed similar to what pension funds can offer. The success of the PER seems to grow at the same rate as the anxieties of the French around the solidity of the pension system.