Pension plan

The French pension system, based on distribution, guarantees a pension calculated on the basis of income from employment. However, with an ageing population and a decline in the ratio of contributors to pensioners, retirement income is set to decrease. To maintain your standard of living, it is essential to plan ahead.

The Individual Retirement Savings Plan (PER) is now one of the leading schemes for building up retirement savings while enjoying immediate tax advantages.

1. Why take out an individual PER pension plan?

The PER allows you to:

• build up long-term savings, invested on a capitalisation basis,

• benefit from a tax reduction on each payment (within certain limits),

• anticipate the drop in income during retirement by building up additional income,

• ensure advantageous transfer in the event of the subscriber's death.

👉 Example: a payment of €5,000 into a PER, with a marginal tax rate (TMI) of 41%, results in an immediate tax saving of €2,050..

2. Who is the PER intended for?

The individual PER is open to everyone (except minors since 2024): employees, self-employed persons, students, unemployed persons, retirees, residents and non-residents.

➡️ It is particularly attractive for people:

• aged between 30 and 55,

• in employment,

• with a high marginal tax rate (30%, 41% or 45%).

The higher the taxpayer's tax rate, the greater the tax benefit.

3. How does a PER work?

• Payments: flexible, one-off or regular, from personal savings (or by transfer from another retirement savings scheme).

• Savings lock-in: funds are frozen until retirement, except in exceptional circumstances (disability, death of spouse, purchase of main residence, etc.).

• Withdrawal: upon retirement, savings can be recovered in the form of capital, a life annuity, or a combination of the two.

  There are two main types:

• PER insurance (euro funds and unit-linked funds),

• PER securities (shares, bonds, SCPI, etc.).

4. Advantages ?

• Attractive tax treatment: deduction of payments (up to 10% of professional income, with a specific ceiling for self-employed persons).

• Flexible management: free or horizon-based management.

• Diverse range of investment vehicles: euro funds, equities, real estate investment trusts (SCPI), ETFs, etc.

• Easy transfer: capital transferred to designated heirs or beneficiaries, often with reduced taxation.

5. What are the risks?

• Savings frozen until retirement (except in cases of early release)

• Capital loss on unit-linked products (except euro funds).

• Sometimes significant fees (entry, management, arbitration).

• Tax benefit capped (and not transferable if the deduction exceeds the tax due).

6. PER taxation

• During the savings phase: no taxation on gains as long as they remain invested.

• Upon withdrawal:

  • In capital: premiums taxed at the income tax rate, interest at the flat tax rate (or at the optional rate).

  • In annuity: taxed as a retirement pension (with a 10% allowance), or partially if the subscriber has waived the tax deduction on entry.

• In the event of death: favourable tax treatment, similar to that of life insurance (particularly for PER insurance, with an allowance of €152,500 per beneficiary under the age of 70).

✅ In summary:

The individual PER is a powerful tool for preparing for retirement while immediately reducing your taxes. It is primarily intended for high-income earners who are able to set aside a portion of their savings for the long term. When chosen and managed wisely, it can be a solid pillar of any wealth management strategy.

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