The French retirement savings plan (PER) builds long-term savings to supplement income in retirement. Its suitability depends on your time horizon, need for access to funds, tax position and ability to bear losses.
Savings mainly intended for retirement
Funds are normally locked until retirement. The law allows early release in specified cases, including certain life events and purchasing a main home. For a main-home purchase, rights arising from compulsory contributions remain locked. A PER therefore does not replace an accessible emergency fund.
Deducting contributions: a choice to consider
Voluntary contributions may be deductible subject to eligibility conditions, including age, and the applicable limits. You can opt out of deduction for a contribution by informing the plan manager. A deduction reduces taxable income; it is not a tax reduction of the same amount and does not benefit every household equally.
Plan for tax on withdrawal
On an ordinary lump-sum withdrawal, the portion arising from previously deducted voluntary contributions is subject to income tax. Gains have their own tax treatment. Where contributions were not deducted, repayment of those contributions as capital is not subject to income tax, while gains remain subject to their own rules. An annuity and early release follow specific rules. Compare any upfront saving with the expected tax on withdrawal.
Compare fees, investments and risks
Check contribution, management, investment and transfer fees and the withdrawal options. Unit-linked investments can lose value. Lifecycle management gradually reduces risk exposure according to its rules, but guarantees neither capital nor returns. Read the information documents and choose a risk level compatible with your circumstances.
What about an existing PERCO or another plan?
It may be possible to retain or transfer an older plan subject to conditions. Before transferring, compare fees, guarantees, available rights and tax consequences. A transfer is not automatically preferable. Life insurance and accessible savings can serve other needs; a PER is not suitable for everyone or every project.
Prepare your assessment
Start with your budget, emergency savings, project deadlines and retirement entitlements. A discussion can help assess the possible role of a PER without promising returns or automatic tax benefits.
Review your situation with an adviser
