Retirement savings: is PER an investment reserved for the rich?

A PER, or Retirement Savings Plan as its name suggests, allows you to invest your savings throughout your working life to provide extra income in retirement. It looks promising on paper. But is PER really interesting for everyone?

Opening a Retirement Savings Plan (PER) allows you to build capital so you can increase your retirement income. Yes, but the main advantage of PER remains first tax creditability voluntary payments made. And the more taxed you are, i.e. the higher your marginal tax rate (TMI), the more attractive the PER and its tax deduction from payments. So is this investment aimed at all types of savers or is it only reserved for the wealthiest?

Amounts voluntarily paid into a retirement savings plan are deductible from taxable incomewithin the limit 35,194 euros for 2023. Let’s take the case of a single person: with 50,000 euros of taxable income, he is part of the 30% tax bracket. If he pays €3,000 into his PER by the end of the year, he will only be taxed on €47,000 of income and will be able to save 900 euros tax (30% of 3000 euros).

Estimated revaluation scale 5% – 2024 tax on 2023 income
Distribution of income according to tax share Rate valid for the tranche
Until 11316 0%
From 11317 28852 11%
From 28853 82499 30%
From 82500 177444 41%
More than 177444 45%

Scale estimated based on calculations made by MoneyVox. The revised scale will be known only with the 2024 Finance Act.

Tax exemption: opening PER for your children is (soon) over!

Make the most of this savings product

However, to take full advantage of this PER-specific tax advantage, it is advisable to reinvest the tax savings to create leverage. Illustration with our typical saver with a marginal tax rate of 30%. By placing his €900 in tax savings on his PER, it’s as if he should they saved 3900 euros for an effort to save only 3000 euros.

A saver hates to lose a long-term benefit in the short term. It would be a real shame to lose the tax savings with the capitalization effect you have behind it. Leverage is extremely strong, explains Yves Conan, CEO of Linxea.

But beware, this tax benefit is temporary: the payments that the investor has decided to deduct from his income will not definitely escape income tax. AND catching up is underway upon liquidation of PER, in other words retirement. However, the winner remains the saver.

Income generally declines in retirement, the tax bracket is lower than during working life. The result: if our typical retiree goes from a TMI of 30% to 11%, the tax authorities will not withhold €900 in taxes, but only €330, a net tax saving of €570.

Until now, PER has been marketed as a tax-exempt instrument

Until now, PER has been marketed as a tax-free tool and is therefore aimed at wealthier people. And yes, reinvesting tax savings over the long term is the best way to capitalize on retirement. But PER remains a very good product regardless of its stock market. If we are few or not taxed, the tax benefit is terminateddefends Olivier Rull, co-founder of Caravel, a platform specializing in supplementary pension.

Taxes: five tax relief options until the end of the year

PER for more modest incomes

For the half of French people who do not pay income tax, the creditability of voluntary payments does not a priori represent any interest. Fortunately, it is possible to give up. But what is the point of opening PER in this case?

Mainly because the tax advantage is not completely lost. In the event of capital outflows at retirement, only the gains made through your savings will be subject to PFU (income tax + social security contributions) or flat tax. The capital is not taxed. Taxation is then the same as for…life insurance.

Then, because if the goal of the PER is to generate additional income at the time of retirement, your savings are blocked for the duration of your contract, with some exceptions. A criterion that can be scary. However, some savers may find this reassuring.

If we give up the tax benefit, the PER is a locked-in life insurance contract. But PER also has this protective side, says Yves Conan. We will not be able to consume these savings. At PER, savings are protected until retirement. For big spenders or those starting their working life and therefore have less money to put aside each month, lock-in amounts can be an advantage. For someone bringing in €100 a month in savings, their cash cushion can be built up to €70 a month in life insurance and €30 a month in PER. It’s all a matter of proportion.

30 euros per month for 20 years, which represents a final capital 7200 euros, and a little more with interest. This is far from negligible for supplementing your pension.

However, a parliamentary report presented on 27 September recommends revising the tax regime for retirement savings so that it is its benefits are not concentrated on high-income taxpayers. The authors note that PER is ultimately unattractive to low-income households. However, these households are generally deprived of long-term savings and would benefit fully from a locked-in product until retirement, which is likely to provide them with much higher returns than those from regulated savings.

The report therefore recommends giving savers who do not benefit from the deductibility of payments an exemption from capital gains from income tax (without social security contributions), as is the case today with the investment plan. characteristic: long holding and strong equity investment in the pilot.

In what cases should PER be released before retirement?

Under certain conditions, PER may be released prior to retirement if:

  • dcs spouse or PACS partner, disabilities the holder, his spouse or PACS partner, his children;
  • overdraft situationtermination of unemployment insurance claims;
  • judicial liquidation business holder;
  • acquisition of main residence but only for funds from the saver’s voluntary payments or employee savings.

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