The 2021 interests of your investments? They are no match for soaring consumer prices. The Faider, federation of savings associations, wanted to quantify the real loss, counting inflation: 40 billion euros of lost purchasing power, just on the euro funds of life insurance. And 3 billion more because of taxation!
Lose money. And be taxed on those losses. Here is a summary of the vicious circle in which savers are currently plunged, and which the Faider denounces bluntly. The Federation of Independent Associations for the Defense of Retirement Savers (Faider) is organizing a symposium this Thursday, February 17, as the presidential election approaches, and here is one of the main complaints put forward: why tax the returns of the save when those are more than eaten away by inflation?
Inflation could be anticipated, force to manufacture money en masse, tackled to begin with Guillaume Prache, president of the Faider, by referring to the accommodating policy of the European Central Bank for several years. Long low, inflation rose sharply in 2021 and is now around 3% according to INSEE. Result, according to Guillaume Prache: Who pays? The savers! And in addition to real losses, public authorities use the monetary illusion of returns before inflation to tax them.
40 + 3 billion euros
To materialize this loss of purchasing power on the part of savers, the Faider calculated the financial gain after inflation of life insurance funds in euros, which remains the most significant investment in France. The Faider thus applied a return of 1% – the average rate estimated for 2021 to the 1653 billion euros of the funds in euros, before subtracting the annual inflation of 2021. Result: more than 40 billion euros (1) real losses in purchasing power in one year, in 2021!
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However, the tax applies to returns before inflation, and not after the impact of the price increase. To stay on funds in euros, the income tax is obviously not systematic but social security contributions at 17.2%, they are. The Faider has rounded its estimates to show the following figures, limiting itself to the single life insurance euro fund: 40 billion euros real losses due to inflation + 3 billion euros because of social security contributions alone. The Faider therefore recalls that these 3 billion euros are even underestimated, since there is sometimes added income tax on certain life insurance earnings.
Hence the following request from the Faider, to the government and to the candidates for the 2022 presidential election: take inflation into account when calculating taxable earnings savings.
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(1) The Faider used the harmonized inflation rate, comparable to the European level, from INSEE. The HICP was 3.4% at the end of 2021.