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retirement savings, employee savings … what changes

Covenant Law: retirement savings, employee savings ... what changes

PACTE LAW – As of October 1, new retirement savings products will be able to be marketed in France, thanks to the Pacte law. We will explain everything to you.

[Mis à jour le 30 septembre 2019 à 9h10] Retirement savings are changing with the Pacte law. To simplify the complex retirement savings landscape, the executive launched the creation of the Retirement Savings Plan, also called PER. The marketing of the three products must start from Tuesday 1st October 2019. In detail, it is planned to launch an individual retirement savings product, simply called Retirement Savings Plan, as well as two group products. If you already have a retirement savings plan, don’t panic. Old devices should not disappear before 1st October 2020. Find in this article all the information on these new retirement savings products and the devices that should change with the Pacte law.

To make retirement savings products more attractive, the government has decided to simplify the landscape, by creating three products under the Pacte law. The first is an individual retirement savings product: the Individual Retirement Savings Plan (PERI). It must replace the PERP (Popular retirement savings plan) and the “Madelin” scheme, reserved for self-employed workers. Contracts may be opened in the form of insurance or title account contracts. The Covenant Law also provided for the creation of two collective retirement savings products, the collective PER (PEREC) and the compulsory PER (PERO), to replace the Perco (Savings plan for collective retirement) and ex-article 83. One of them will be open to all employees and the other will be reserved for certain categories of employees only.

As recalled Income, each product will be divided into three compartments, depending on the nature of the payments: voluntary payments made by the saver, payments from employee savings (profit-sharing, participation, etc.) and compulsory payments by the employee or the employer. Depending on the nature of the payments made, the exit terms and taxation will change. Find all the information on the PER in our article.

Today, only 16% of employees benefit from a system employee savings within their company. The Covenant Law provides for a easing of taxation on profit-sharing. The social package, which corresponds to the taxes paid by the employer when it distributes profit-sharing to its employees, has been abolished since January 1, 2019 for companies with less than 250 employees. For companies with less than 50 employees, the social security rate has been abolished on all payroll savings payments (profit-sharing, participation and employer contributions) The State also wishes to encourage the implementation PERCO’s place in companies by removing the prerequisite for them to have a company savings plan (PEE).

Life insurance is a very popular investment for French people. But the majority of savers place their savings in euro funds. The government wants to direct savers to Eurogrowth funds, a product launched in 2014 and which has had little success. These funds are not available at all times, unlike life insurance. It offers a capital guarantee only at maturity and also contains a share invested in shares. The financial product should be simplified. Objective: bring resources to companies. The government has announced an incentive to transfer savings from life insurance to retirement savings. As previously stated, any redemption of a life insurance contract of more than eight years will make it possible to obtain a tax allowance, if the sums are reinvested in a retirement savings plan and the redemption occurs at least five years before retirement. This device is in place until 1st January 2023.

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