Among the investments and solutions regularly mentioned is the Retirement Savings Plan (PER). Since its introduction on 1 October 2019 with the entry into force of the Pacte law, it has gradually replaced the various individual and group contracts. In addition to company, collective or compulsory PERs, which replace the PERCO and Article 83 contracts respectively, the individual PER replaces the PERP and the Madelin contract.

What is the individual PER contract?

By definition, this contract is a long-term savings product designed to prepare for retirement. The principle is similar to that of funded pensions. In other words, it allows you to save, with a potential tax advantage, to build up an asset that will be used as a supplementary pension in the form of an annuity or a lump sum.

There are two types, the insurance PER and the bank PER, otherwise known as the investment PER. The latter is a relatively uncommon investment that takes the form of a securities account. It authorises investment in live securities, UCIs and FCPs. The best-known PER is the insurance PER, which is similar to the way life insurance policies work.

Focus on the insurance PER

This investment vehicle can be used by both employees and the self-employed. As with life insurance policies, an asset allocation must be made. This may include a euro fund and Units of Account (UA).

In most cases, the policy is managed on a managed basis. This means that when the estimated date of retirement is a long way off, the policy is allocated dynamically in the search for performance. The closer the retirement date, the more the savings are allocated to less volatile vehicles to secure the policy's accumulation. However, it is also possible to benefit from unrestricted management, personalised by the financial adviser according to the customer's profile, objectives and expectations. In this case, there is greater operational flexibility, but it requires the support of a specialist.

But what's the difference with life insurance?

To begin with, let's talk about another point in common between the individual PER and life insurance: taxation in the event of the death of the subscriber. If the subscriber dies before the age of 70, the funds are subject to article 990I of the CGI; if they die after that, they are subject to article 757B of the CGI.

There are two major differences. The first is the tax advantage generally associated with the sums paid into the PER. Subject to certain conditions, they are deductible from taxable income and therefore reduce the income tax due. The higher the household's marginal tax bracket, the greater the tax impact.

The second is flexibility of use. The funds in a life insurance policy are available at any time, although taxation changes over time; whereas in an individual PER, only in special cases can the funds be released in the form of capital. The contract will generally be paid out in the form of an annuity.

These investments are just a few of many, so they need to form part of an overall wealth strategy. To do this, Wealth A7's team of Wealth Management Advisers can draw up a complete wealth or pension assessment and advise you in the best possible way - contact us!

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