A few weeks before the resumption of parliamentary work, senators LR Jean-François Husson and Albéric de Montgolfier, respectively general rapporteur and vice-president of the Senate Finance Committee, tabled a bill this week aimed at controlling the costs life insurance investments and retirement savings plans.
The two elected officials, authors of a recent report on the subject which advises, among other recommendations, to remove certain costs from these products, translated thirteen proposals resulting from this work into a text tabled on March 28.
Emphasizing the need to direct household savings more towards these investments in order to contribute to the financing of the French economy, and to offer them at the same time more attractive investment conditions, the bill sets out a set of provisions to limit these fees, increase the transparency of business practices, and stimulate competition in the savings market.
Prohibition of movement commissions
Messrs. Husson and de Montgolfier wish in particular to prohibit the French exception of movement commissions – fees collected by management companies during sale or purchase transactions on the portfolio of savers in addition to brokerage fees -, to impose on intermediaries (banks, insurance companies, brokers, etc.) the publication of a list of ” low-cost listed index products (such as ETFs) available for subscription or even entrusting the Advisory Committee for the Financial Sector with the task of monitoring changes in insurance pricing practices by imposing on intermediaries an obligation to publish on their websites all total costs attached to their life insurance policies.
Discount “Madeline”
The text also contains tax relief provisions, such as strengthening the Madelin income tax reduction (which applies to capital subscriptions for SMEs), increasing it from 18% to 25%, and, by way of derogation, at 30% until 2026.
In order to strengthen the transferability of contracts, it is proposed to extend until 2026 the benefit of the tax incentive provided for by the Pacte law to transfer sums placed in a life insurance contract to a PER, to prohibit the application of fees in the event of transfers of life insurance contracts within the same company, and to ensure the portability of the tax anteriority of an old contract in the event of redemption and opening of another support subscribed with another company as soon as all the savings are transferred.
” The total transferability of the sums placed on a life insurance contract thus permitted tends to guarantee real competition in this segment of the savings market and to allow savers to opt for more efficient contracts with fewer costs. “, defend the authors of the proposal.
Summary tables of fees soon to be published
The level of costs of life insurance contracts and PER are not only in the sights of legislators. Last year, the Minister of the Economy Bruno Le Maire stepped up to denounce the salty bill charged by the banking-insurance sector to savers.
With galloping inflation weighing on the purchasing power of the French – and the need to finance the recovery – the executive urges the market to offer households more attractive and less expensive investment solutions. A few weeks ago, the profession agreed on a market agreement, under the watchful eye of Bercy, to undertake to publish next June tables of harmonized costs for their life insurance and PER offers.
For its part, the government published an order at the beginning of the month which will soon make it compulsory to communicate the total costs of unit-linked life insurance, PERs and capitalization contracts.