The Plan d’épargne Retraite (PER) is a pension-like product that is available to residents of France since the 1st of October 2019. There are three different kinds:
- PER individuel (PERIN), a form of personal pension plan
- PER d’entreprise collectif (PERCOL), a form of voluntary company pension plan
- PER d’entreprise obligatoire (PEROB), a form of mandatory company pension plan
The PER individual replaces the PERP and contrat Madelin, the PER d’entreprise collectif replaces the PERCO and the PER d’entreprise obligatoire replaces the contrat article 83. This blog will focus on the PER individuel.
PER individuel
The PER is a long-term savings product which can provide you with a capital lump sum or an annuity in retirement. A lifetime annuity in French is known as a rente viagère. You can also choose between a combination of income and capital at your retirement.
From what age can I access my PER?
Normally, you can access your PER from your French retirement age, which is currently depends upon your date of birth as detailed below:
| You were born: | You can retire from: |
| Before 1 September 1961 | 62 years old |
| Between 1 September 1961 and December 31, 1961 | 62 years and 3 months |
| In 1962 | 62 years and 6 months |
| In 1963 | 62 years and 9 months |
| In 1964 | 63 years old |
| In 1965 | 63 years and 3 months |
| In 1966 | 63 years and 6 months |
| In 1967 | 63 years and 9 months |
| From 1 January 1968 | 64 years old |
However, you may be able to access your PER early in the following circumstances:
- Invalidity (you, your children, your spouse or your civil partner)
- Death of your spouse or your civil partner
- The end of your French unemployment rights
- Over-indebtedness
- The end of a non-salaried professional activity due to a liquidation order
- Purchase of your primary residence
- Any other situation which enables you to access your mandatory French pension early
What are the tax advantages of a “PER individuel” in 2023?
You can deduct the amounts that you pay into a PER individuel from your taxable income for the year, the tax-deductible limits are stated below:
- For employed people, the limit is the highest of the following:
- 10% of your employed income for the previous year, net of social security contributions and work expenses.
- 4,114 euros
- For self-employed people, the limit is the highest of the following:
- 10% of your taxable profit for the previous year with the profits limited to a maximum of 351,936 euros plus 15% of your taxable profit between 43,992 and 351,936 euros.
- 4,114 euros plus 15% of your taxable profit between 43,992 and 351,936 euros.
How is the capital or income taxed on retirement?
This depends on whether you claimed tax relief on the deductions and whether you choose to access your funds by capital or income (or both).
If you choose to claim your tax relief on your payments into your PER and if you take your money out as capital lump sums:
- Your contributions are subject to normal income tax rates, but are exempt from social charges
- Your gains are taxed at a flat-rate of 30%, made up of 12.8% income tax and 17.2% social charges. The bank deducts the 30% before making the payment to you.
- You can ask to pay your marginal tax rate, rather than the flat-rate, if your income is below 25,000 euros for an individual or 50,000 euros for a couple
If you choose to claim your tax relief on your payments and if you take your money out as annuity income:
- Your pension income is subject to normal income tax rates for pensions
- A 10% tax-relief is provided before the tax rate is applied
- Social charges at 17.2% are applicable on the amount of your voluntary contributions, after the deduction of the following percentage tax reliefs according to your age:
- 30% if you are under 50
- 50% if you are between 50 et 59
- 60% if you are between 60 and 69
- 70% If you are older than 69.
If you choose to not claim your tax relief on your contributions, or make payments in excess of the amount that you can claim tax relief, and you choose to take your funds out as capital, then the tax treatment in 2023 is as follows:
- The part corresponding to your voluntary contributions are exempt from income tax and social charges
- The part corresponding to gains is subjected to a flat-rate of 30% (income tax and social charges combined)
- Again, you can ask to be subjected to your marginal tax-rate if your income is less than 25,000 euros for an individual or 50,000 euros for a couple
If you do not claim tax relief on your contributions and you take your pension as an annuity income, then the tax treatment is as follows:
- The income is taxable according to a special annuity income regime and there are deductions depending upon your age when you start your annuity income:
- 30% if you are under 50
- 50% if you are between 50 et 59
- 60% if you are between 60 and 69
- 70% If you are older than 69.
- Social charges are also applicable on the part of your contract associated with gains at 17.2%
Can I transfer an existing pension contract into a PER?
You can transfer funds from an existing PER individuel to any other type of PER without charge after five years. If you transfer before five years, then a charge of up to 1% may be applied.
You can also transfer older pension products that existing before the PER was created in 2019 into a PER individuel, these are stated below:
- Plan d’épargne retraite populaire – Perp
- Contrat Madelin
- Préfon
- Plan d’épargne pour la retraite collectif – Perco
- Complément de retraite mutualiste – Corem
- Complément retraite des hospitaliers – CRH
- Contrat article 83
What happens to my PER on death?
If you die with a PER individuel then your PER will be closed on your death. The proceeds will be paid to your beneficiaries in the form of a capital lump sum or an income. If the funds are in the form of capital, then it will be subjected to normal inheritance tax rates (Droits de succession).
If the funds will be used to purchase an income from an insurance company then the tax rate differs depending upon your age and follows the same rules as the Assurance Vie:
- Death before 70 years old
- The capital will be subjected to a tax relief of 152,500 euros per beneficiary and the rest will be subject to normal inheritance tax rules
- Death after 70 years old
- The first 30,500 euros are not taxable and the rest are subject to normal inheritance tax rules
You can contact AISA International France if you would like any advice on pension planning whilst a resident of France or whilst having French retirement products.
Main source:
https://www.service-public.fr/particuliers/vosdroits/F34982
The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. Additionally, the author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, this article is dated and is based on legislation as of the date. It should be noted that legislation changes, but articles are rarely updated. Sometimes a new article is written; so, please check for later articles. Additionally, check for changes in legislation on official government websites. Finally, this article should not be relied on in isolation.
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