Livret A, PEL, life insurance…. Good news, the rates of return on these investments have increased significantly this year. But to compare what they bring you, it is necessary to take into account taxation. Indeed, for some of them, earnings may be subject to social security contributions, or even income tax.
Livret A and LDDS: 3% net of tax
What awaits you in 2023. On February 1, the Livret A rate rose to 3%. Despite an expected increase of 4.10% on August 1 (according to the calculation formula), the return on the investment preferred by the French will remain at 3%. A fig rate for the next 18 months. For 10,000 euros on a Livret A, in 2023, you will receive 291.70 euros in interest (and not 300 euros because the month of January remains remunerated at 2%).
Interest 2022. The money kept for one year on your Livret A account brought you 137.50 euros if the balance was 10,000 euros. The rate is identical on a Sustainable and Solidarity Development Booklet (LDDS).
Taxation. Interest earned on these regulated savings accounts is completely tax-free: you pay neither income tax nor social security contributions.
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Popular savings account: 6% net of tax
What awaits you in 2023. After a further rise to 6.10% on February 1, the LEP rate was to rise to 5.6% on August 1 (according to the calculation formula). Good news, this rate will only drop by -0.10% and will remain at 6%, at least until January 31, 2024. Real rate for the whole of 2023: 5.93%. Bruno Le Maire also announced that the LEP ceiling will be raised to reach 10,000 euros, against 7,700 euros so far. This measure should come into force at the beginning of October.
Interest 2022. In 2022, the rate of the People’s Savings Account (LEP) rose from 1% to 2.2% in February and then to 4.6% in August. In other words, an average rate over the year of 2.6%. By placing 7,700 euros for the whole of 2022 on your LEP, your interest rose to just over 236 euros compared to 456.61 euros for 2023.
Taxation. Interest earned on LEP is totally tax-exempt.
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Youth booklet: better than the Livret A, net of tax
What awaits you in 2023. The rate of the Livret A being 3% since February 1, the remuneration of certain young people’s savings accounts is mechanically increased since they must at least bring in as much as a Livret A. The rates of the young savings account oscillate between 3% and 4% for the year 2023.
Interest 2022. The remuneration of the young savings book is set freely by each bank, but the rate must necessarily be equal to or higher than that of the Livret A. Thus the remuneration of the young savings account was between 1% and 2%. This booklet is limited to 1600 euros and reserved for 12-25 year olds.
Taxation. Like the LEP or the Livret A, the remuneration is net of tax.
Bank book: 0.65% before flat tax
What awaits you in 2023. To compete with the Livret A, currently 3%, banks and even banking subsidiaries of car manufacturers are offering boosted rates of up to 4.5% over a few months. However, by measuring all existing bank books, the Banque de France estimates their average return at 0.65%, according to the latest available data, at the end of May 2023.
Interest 2022. The rate for traditional, non-regulated bank books is set freely by each establishment. The average remuneration of bank books reached in 2022, 0.33% according to the Banque de France.
Taxation. The annual interest on classic booklets is subject to the single lump sum levy (PFU), or flat tax: 17.2% social security contributions and 12.8% income tax, or 30% in total. Non-taxable households can avoid income tax, but remain subject to social security contributions. Schematically, a savings account paid at 0.65% gross only earns you 0.45% net of tax, after flat tax.
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PEL: at least 2% before tax
What awaits you in 2023. The opening of a PEL in 2023 makes it possible to block a rate of 2%, before tax. Bruno Le Maire announced on July 13 that it will be possible for savers to release the necessary sum from their PEL for energy renovation work, without having to close their plan. This new feature should apply from the beginning of 2024.
Interest 2022. The advantage of the Housing Savings Plan, for the saver, is to benefit from a contractual rate: the rate fixed at the opening, which was 1% last year, is the one that applies until the end of the plan! However, some old PELs are paid 2.5% or even more than 3% gross. Your interests? It all depends on when you opened your PEL.
Taxation. Any PEL opened since 2018 is taxed from its first year of ownership. Like bank books, 2% interest is therefore subject to flat tax (30%), which corresponds to a return of 1.4% net of tax.
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What about the housing savings account (CEL)? Index on the Livret A rate, its remuneration is now up to 2% but the interest is subject to the flat tax, which gives 1.4% net.
Life insurance, funds in euros: around 1.91% before tax
What awaits you in 2023. In 2023, life insurance yields will continue to rise to reach up to 3% for the best contracts.
Interest 2022. The remuneration of the risk-free support of life insurance, the fund in euros, has started to climb again: 1.91% according to the final estimate of the gendarme of the sector, the ACPR, against 1.30% in 2021.
Taxation. Expressed net of management fees, the return of a euro fund is not net of tax! On all recent contracts, annual interest is immediately reduced by social security contributions (17.20%). An announced return of 1.91% for 2022 yields you around 1.60%. In addition, depending on the amount and date of your withdrawals, your earnings may be partially subject to income tax.
Life insurance: why the rate of euro funds should reach up to 3% in 2023
Life insurance, unit-linked: the yo-yo of the markets
What awaits you in 2023. It is currently impossible to deliver a 2023 performance estimate for life insurance unit-linked units. This will depend on the evolution of the financial markets (see the stock market below) for most of them. As for specific vehicles such as real estate funds, the performance of SCPIs reached 4.53% on average in 2022. The average return should remain stable in 2023 despite greater variations between the different types of SCPIs.
Earnings 2022. Last year, UC media recorded a overall performance of −11.2%, after a good year in 2021 (+9.9%), according to France Assureurs. The share of unit-linked in all life insurance premiums stands at 39.8% in 2022. A negative performance following the sharp rise in interest rates and driven by the combination of a bad year in the equity and asset allocation fund segments (−7.4% and −3.7% respectively), as well as in bond products (−1.2%).
However, unit-linked assets are not necessarily linked to stock market indices: real estate funds, for example, are less dependent on the financial markets.
Taxation. The capital gains realized thanks to the UC are recorded at the time of the withdrawal, partial or total, on your life insurance. They are then subject to social security contributions (17.20%) and possibly income tax, via the single flat-rate deduction.
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Employee savings: analyze over 5 years
What awaits you in 2023. Unfortunately it is still impossible to ensure a good return for the current year. Indeed, performance evolves according to the financial markets. Note, for a PEE company savings plan and even more so for a retirement savings plan (PER), an annual performance only offers a limited view: it is better to compare returns over 5 or 10 years.
Earnings 2022. On the funds referenced in the employee savings plans (PEE, Perco or now PER entreprise), the FCPEs vary like the unit-linked funds of life insurance according to market upheavals. Given the extreme diversity of the funds, the Banque de France estimated the annual performance of employee savings funds at -7.9% at the end of December 2022 compared to +10% the previous year and a loss of 3% in 2020. To find out the performance of your PEE, you should consult your annual statement.
Taxation. In the case of a PEE, the most common employee savings plan, you are exempt from income tax on earnings when the plan is released. But you still pay the social security contributions (17.2%).
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Retirement savings plan: the long-term bet
What awaits you in 2023. A PER should not be judged solely on the basis of the 2022 performance of its fund in euros. However, the forecasts for the current year are good and the funds in euros of the PER should reach up to 3% (for the best contracts), in 2023. For a long-term investment, it is also necessary to watch the level of costs, but especially the performance of the pilot management (or horizon).
Earnings 2022. The Retirement Savings Plan (PER) was officially launched in October 2019. And many establishments only marketed their PER in mid-2020. Traditionally, funds in euros presented on retirement products (Perp and Madelin) are on par with life insurance funds: funds in euros thus paid an average rate of 1.90% last year.
Taxation. When paying into a PER, you have a choice: whether or not to reduce your taxable income. Depending on this choice, your savings will be more or less taxed on exit: the tax will relate to earnings or capital + earnings. Without forgetting the systematic social security contributions (17.2%).
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Stock market: flat tax… and (very) alternative markets
What awaits you in 2023. Despite inflation falling to 4.5% in June over one year according to INSEE, the rise in European Central Bank (ECB) rates continues and should reach 4% in February 2024. In this context, Antoine Fraysse-Soulier, market analyst for the broker eToro, believes it is possible that stock prices will rise further.
Earnings 2022. The CAC40 fell by -9% in 2022, against a backdrop of inflation, the war in Ukraine and the rapid rise in central bank rates. The year had started off very well. Driven by the reopening of borders and the resumption of global economic activity after the pandemic, the CAC40 had reached 7384 points in January. But beware, stock market indices only represent an overall picture, and do not include dividends: it all depends on the companies in which you have invested.
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Taxation. Capital gains made on a securities account are subject to flat tax (30% in total), unless there is a tax option to the contrary. If you invest in the stock market via a stock savings plan (PEA), your earnings are subject to social security contributions (17.2%) but not income tax provided you keep the plan for a minimum of 5 years. For dividends, you can benefit from an allowance, but only if you waive the flat tax on all of your investments.
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