The PER has three versions: an individual PER that replaces the PERP and the Madelin contract, a collective company PER that replaces the PERCO, and a mandatory company PER that replaces the “article 83” contract. We will focus here on the individual PER, dissecting its characteristics and operation, to highlight all its long-term patrimonial interest.
The Retirement Savings Plan, a long-term savings product that entitles you to capital or a life annuity
The PER is a savings tool, opening the right, once newly arrived at retirement, to the payment of a capital, a life annuity (periodic payment until death), or a combination of both. Although the product is aimed especially at working people, it can be contracted at any age and without a professional status condition. When opening a PER, two solutions are made available to the saver, free management or controlled management, which respectively entail:
- The opening in the form of a securities account, which is signed with a company authorized for investment advice;
- Or the affiliation to a collective insurance contract, which is contracted with a specialized company (insurance, mutual, provident society).
With his financial intermediary, the saver then chooses, in the case of managed management, funds in euros or an investment formula (defensive, balanced or dynamic), then pays the amounts he wishes (we are talking about voluntary payments), on a recurring or in blocks. And this without a payment cap.
Payment management is delegated to a management entity, which must present the risk characteristics and the asset management strategy to the saver at the time of subscription. Subsequently, and throughout the life of the product, the manager has the duty to report on the evolution of the investment, specifically mentioning the commissions deducted.
The performance of PER contracts in the market, for a given horizon, under equal conditions, can vary significantly, as well as the costs (affiliation, payments), so it is recommended to compare the PER to make the best decision .
One of the strengths of investing is intrinsically tied to its duration, especially if the PER opens early in life. Because like any financial investment, there is a strong link between the holding period of the assets and their performance! It should be noted that between the subscription of the plan and the moment in which the saver retires, the holder can request his intermediary to change his horizon. One can imagine, without dogma and simply by way of illustration of the theme, an opening of a PER at the age of 30 in a dynamic horizon, then a change to a balanced horizon at 40 years, then a transition to a more defensive horizon as retirement approaches.
Note finally, to be complete on the operation of this support, that the old savings products (PERP, Madelin, Préfon, without exhaustiveness) can be transferred to the individual PER.
An advantageous fiscal framework, for a long-term patrimonial interest
The amounts paid in a PER can be declared in a section of the income tax return. These sums (payments accumulated in the year) are then deducted from the taxable income of the saver or the corresponding household, within a limit established by the legislator. For an employee, this cap currently corresponds to 10% of net income deducted from professional expenses, for a maximum deduction of 32,909 euros. For a self-employed worker (craftsman, merchant, liberal profession, entrepreneur, farmer), the ceiling rises to 76,102 euros.
We will be very careful to point out that the tax benefit is neither a tax reduction nor a tax credit. This is a deduction made from taxable income. Therefore, it is all the more advantageous the higher the marginal tax bracket in which the saver is.
In the event that the saver has not deducted the payments each year from his tax base (if it is little or not taxable, for example), a tax advantage is provided at the time of departure. To complete the tax regime of the Retirement Savings Plan, it closes on the death of the saver, with payment to the beneficiaries designated in the contract or, failing that, to the heirs. In the event of death after the age of 70, inheritance tax is not deducted from part of the amounts paid, up to the limit of 30,500 euros.
Considerations to take into account
In exchange for these important tax advantages, the capital is blocked. It is not, therefore, a liquid investment medium to manage assets with freedom and agility in the financial markets, such as the ordinary securities account and the PEA, or to a lesser extent, life insurance. The PER has that fundamental characteristic of blocking the capital, and this until retirement.
However, a series of guarantees are provided that allow the PER to be closed early (before retirement, therefore), in the event of disability, death of the married spouse or PACS, over-indebtedness or termination of unemployment insurance rights. The acquisition of a habitual residence also constitutes a valid reason, being able, where appropriate, to release a larger sum for the personal contribution during the financing operation of the property.
In one word…
Except in very specific cases (life accidents or purchase of the habitual residence), the accumulated savings are not available to the subscriber of a PER. On the other hand, the support allows you to benefit from important tax advantages, advantages that are fully profitable, especially in the situation of a taxpayer who is in a high tax bracket (with high income, therefore), and willing to save large sums, within of the limits provided. A tax advantage that also remains very attractive for intermediate households who wish to prepare well in advance for their retirement. And this while making a profitable financial investment. The gain in serenity is then concrete.
Among the main families of financial investments (PEA, life insurance, SCPI, securities account, etc.), the PER is the one that presents the most interest when preparing for retirement. It is designed in this sense.
Its advantage also lies in its flexibility at the start. A person who expects a significant loss of income during retirement can compensate for it, in whole or in part, by paying it in the form of an annuity. On the contrary, the payment in the form of capital can be favored by the saver who wants to release capital at this precise moment of his life, for a new property for example, or to finally carry out the project of his dreams…
This content was produced in association with Finance Heroes. The BFM Business editorial team was not involved in the production of this content.
Source: BFM TV
