Over 10 million French citizens have adopted retirement savings plans (PER), reflecting significant popularity since their introduction in 2019. With around 119 billion euros in assets across various plan types, the PER primarily attracts higher-income individuals due to its tax benefits, allowing contributions to be deducted from taxable income. However, potential investors should be cautious of hidden fees that may erode returns, urging careful examination of fee structures when selecting a PER for their retirement strategy.
Over 10 Million French Citizens Embrace Retirement Savings Plans
More than 10 million individuals in France have opted to establish a retirement savings plan (PER), marking a significant achievement that has captured the government’s attention. With over 11 million accounts and assets nearing 119 billion euros, the PER has proven to be a popular choice among the French populace looking to prepare for their future.
Eric Lombard, the Minister of Economy, Finance, and Industrial and Digital Sovereignty, expressed his enthusiasm regarding the initial success of the PER, which was introduced in 2019 under the Pacte law. This statistic indicates that approximately one in every six French citizens currently holds a PER.
According to a recent announcement from Bercy, this trend encompasses various types of PERs, including collective (27.2 billion euros in assets) and mandatory (23.6 billion euros in assets) company plans, along with individual PERs (68.1 billion euros in assets) that boast over 4.1 million participants. Notably, nearly half of all PERs opened are new contracts rather than transfers from existing retirement savings products.
A Closer Look at Tax Benefits and Potential Pitfalls
While the PER has gained traction, it primarily appeals to a specific demographic: individuals in higher tax brackets, particularly those earning 30% or more. The Court of Auditors has highlighted that this investment tool offers significant tax perks that predominantly benefit wealthier and older savers.
The standout feature of the PER is the ability to deduct contributions from taxable income, a benefit reflected annually on tax notices. Couples who file jointly can even combine their contribution limits, making it an attractive option for those with considerable income disparities.
However, the tax benefits of the PER are temporary, as contributions will be taxed upon retirement when the plan matures. Wealthy individuals may still find themselves in a favorable position since their post-retirement tax rate is likely to be lower than during their working years.
Despite the allure of tax exemptions, potential investors must be wary of one significant drawback: fees. Cyrille Chartier-Kastler, founder of Facts & Figures, notes that while many are drawn to the PER for its tax benefits, numerous hidden fees can detract from the overall performance of the investment. “Contributions, management fees, and heavily loaded account units can significantly diminish returns,” he warns, suggesting that individuals might be better off investing in simpler options like a Livret A.
As a result, it is crucial for investors to scrutinize the various fee structures associated with different PER contracts available on the market, whether offered through traditional channels or online platforms. “Over time, hefty fees can cut performance by more than 50%,” emphasizes Sébastien d’Ornano, president of Yomoni.
In light of these considerations, prospective investors should carefully evaluate their options to ensure that they choose the best PER for their retirement strategy in 2025.