New French pension scheme open to all workers

21 March 2020

A new private complementary retirement pension scheme – PER – has been launched by the government for both salaried and self-employed workers.

It replaces PERP for salaried workers and the Loi Madelin private retirement pension for the self-employed. Both will no longer be on offer from this October 1 for new subscribers.

Existing subscribers will be able to keep their policy or transfer it to the new scheme.

The PER (Plan d’épargne retraite) is a long-term savings scheme which allows anyone, regardless of age or profession, to sign up to provide either capital, regular payments, or a combination of both on retirement, in addition to their employment pension.

From five years before you retire, you can start to work out with your provider how you wish to receive the money. In some situations, such as the death of a partner, you can access the fund before retiring.

The premiums are tax deductible within certain limits.

The PER is available from banks, insurance and other financial companies. It was introduced by the Loi Pacte in May 2019 to simplify and harmonise retirement plans and boost take-up, which has been low for the other schemes.

Though France has a high level of savings accounts, with €5,000billion invested, only €230billion is invested in private pensions, compared to €1,700billion in life insurance.

There are three types of PER: individual, a voluntary company scheme or an obligatory company scheme. All are regulated in the same way and, as employment situations change, funds are transferable.

Up to January 2023, there is the offer of a double tax reduction for anyone who transfers a life assurance plan that they have held for eight years to a PER. At the beginning of a career, funds will be placed in high-yield actions and then, as retirement approaches, into lower-risk schemes.

Under the Loi Madelin scheme, subscribers can take out savings only as monthly payments.

The Ministry of Economy says that under the PER, someone who retires at 62 with €30,000 of savings could choose between a monthly payment of around €100 until death or a lump sum payment of €30,000, with some deductions for costs – or a mixture of the two.

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