The French are lucky enough to be able to invest tens of thousands of euros, with state-guaranteed security, total availability and almost non-existent taxation. Are all regulated savings products the same? Here are their respective merits and some tips for choosing according to your profile.
We sometimes forget it, but it is undoubtedly unique in the world. Regulated French savings allow each of us to put aside tens of thousands of euros by taking advantage of a tax exemptionof a total security on capital and a immediate availability. Up to 42,650 euros, for example, for an adult taxpayer with average incomes by combining Livret A, LDDS and LEP.
How to choose among the cousins of the large savings family? Which account should I open first? We screened the Livret A, the Sustainable and Solidarity Development Booklet (LDDS), the People’s Savings Booklet (LEP), the Young Booklet, the Housing Savings Plan (PEL) and the CEL (Home Savings Account), based on six criteria: yield, payment ceiling, accessibility, availability, security and use of funds.
Yield: LEP advantage
This is obviously the first question we ask ourselves when we invest money: how much will it bring me? As far as regulated savings are concerned, the reference is the Livret A rate, set by the State and which influences all the others, with the exception of the PEL. That turns out well: this rate has just doubled and is now 1%. Net, because regulated savings, excluding recent CEL and PEL, benefit from a tax and social exemption, which moreover costs more than one billion euros per year to the State.
On this criterion alone, it is the People’s Savings Book which is the most interesting, by far. His remuneration, in fact, has been fixed since February 1 2.20% net. Why so much difference with the Livret A? Simply because it is designed for protect your savings against rising prices. A role of bulwark against inflation formerly assigned to the Livret A, but which it has recovered since 2018. Its remuneration is thus currently aligned with the average annual inflation during the 2nd half of 2021. And, given the increase current prices (+2.9% in January 2022, provisional figures), it will probably be raised again next August.
| Regulated savings rate of return | |||||||
|---|---|---|---|---|---|---|---|
| Date of application | A booklet | LDDS | THE P | LEE | CEL | ELP | Official Notice |
| From February 1, 2022 | 1% | 1% | 2.2% | 0.75% | 0.75% | (1%) | OJ of 30/01/2022 |
Why this bonus for LEP? Quite simply because it is specifically aimed at the most modest households, those who posted in 2020 (therefore on their 2021 tax notice) a reference tax income (RFR) less than 20017 euros per share of family quotient. Either, all the same, one French household in two approximately, according to the estimate of the Bank of France.
Do these returns seem ridiculously low to you? Often mocked from this point of view, regulated savings are no less advantageous when compared with other products with the same characteristics. According to the Banque de France, ordinary booklets, the rates of which are freely set by the banks, currently yield 0.09% on average, before taxes and social security contributions. Even the euro life insurance funds, traditional competitors of regulated savings, are losing their lead on this criterion.
The ceiling: PEL advantage
Before coming to power in 2012, Franois Hollande had made a promise: to double the ceiling of the Livret A. We cannot, in fact, take unlimited advantage of regulated savings products. Each displays a payment limit, which can only be exceeded by the interest capitalized over the years. The promise of the socialist candidate who became president of the Republic was not kept. From 15,300 euros before his election, the Livret A ceiling has gone 22950 euros. That of the LDDS, on the other hand, has indeed been doubled, going from 6000 12000 euros. The CEL is limited to 15,300 euros, the LEP 7,700 euros and the Livret Jeune 1,600 euros.
On this criterion, it is the Plan Epargne Logement (PEL) which proves to be the most advantageous. It allows to place up to 61200euros at the current rate of 1% gross, or 0.70% net of PFU (1). With a major constraint, however: pay at least 540 euros per year, in monthly, quarterly or half-yearly chances.
Accessibility: Livret A advantage
Booklet A is the ultimate universal bank account. Anyone present in France, regardless of age, can hold one — and only one, double ownership being prohibited — including La Banque Postale, if they are homeless. It is also open to associations, syndicates of co-ownership, HLM organisations, etc. Home savings (PEL and CEL) are almost universal: all natural persons can access it, including if they are minors.
Very easy to access, because they are very widely distributed, the other regulated savings products are a little more restrictive. To open an LDDS, you must be a individual taxpayer. Minors attached to the tax household of their parents therefore do not have access to it. The Livret Jeune is reserved for young people aged 25 and under. As for LEP, we have already seen that it is not aimed at the wealthiest households.
The availability of funds: avoiding the ELP
It is no coincidence that the Livret A is the privileged medium for precautionary savings. It has the immense advantage of not blocking the invested sums, which are available at any time and can even be withdrawn from 10 euros.
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This availability, however, is not exclusive to the Livret A. It also applies to the LDDS, the LEP and the Livret Jeune. No blocking either for the CEL, but a higher withdrawal floor: 75 euros minimum per withdrawal. As for the PEL, if the funds are also available at all times, it prohibits partial withdrawals. You will need to close the account to get your money back. To be avoided, therefore, if you wish to dip into it punctually to cover an expense.
Capital security: draw
100% sure: when you invest your money in a regulated savings product, you are sure not to lose a penny. Not only is the capital guaranteed there, but it is guaranteed by the State. No difference from this point of view between the different products: whatever your choice, regulated savings is all-risk insurance.
The use of money: draw
This is the raison d’être of regulated savings, which explains in particular this guarantee of the State: to attract deposits which will be used by the public authorities to finance certain public policies of general interest – social housing, the city, the energy transition and, via local authorities, education, mobility, drinking water… From this point of view, no difference between Livret A, LDDS, LEP, etc.: the money goes into the same pot, called the savings fund, managed by the Caisse des Dpts et Consignations (CDC).
However, this use only concerns part of the money placed: 60% for the Livret A and the LDDS and 50% for the LEP, i.e. 285 billion euros at the end of 2020. The rest – nearly 203 billion – remains on the balance sheet of the banks charges for the collection. However, they cannot use it as they wish: they must arrow it upwards. financing of SMEs, the energy transition and the social and solidarity economy.
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Conclusion: which product do you prefer according to your profile?
You don’t yet have enough cash to put a ceiling on all regulated savings products? Like more than 80% of the French, you probably already have a Livret A, often opened from your childhood for your parents. However, you may have been interested in stripping it to support one of its cousins.
If your 2020 reference tax income does not exceed the threshold of 20017 euros, start with a popular savings account, the best paid of the lot. To find out if you are eligible, just look at your tax notice or, even simpler, ask your bank, now authorized to directly question the tax authorities. Paradoxically, it is the most underused product: according to the Banque de France’s Regulated Savings Observatory, 13.3% of French adults have one, while 50% are eligible.
LEP 2.20%: in which banks can you easily open this unbeatable savings account?
If you are under 25, think of the Youth Booklet. Admittedly, the rates applied, set by the banks and not by the State, tend to fall. But they often remain higher than the Livret A and cannot legally go below.
If you have solidarity fiberchoose the LDDS as a priority: it allows you to donate all or part of your interests to associations in the environmental and social sectors.
If you have a lot of cash, place, finally, and you want to take advantage of the benefits of regulated savings, you have no choice: you have to turn to the ELP. However, given its constraints (imposed progressive payments, impossible partial withdrawals, taxable remuneration), it may be in your interest to direct your money towards other more practical and profitable investments.
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(1) Unlike other products, PEL rates are generational, ie fixed at the start of the plan with no subsequent changes.