A goldmine for savers who subscribed to it before 2011, the old Housing Savings Plans (PEL) are in the sights of the Court of Auditors. She asks that their remuneration be reduced given its cost to the state and the banks.
1% per year, before taxes and social security contributions: this is what the new Housing Savings Plans currently report, pending a probable revaluation in January 2023. Faced with the Livret A (2% net) or the LEP (4.6%), the PEL no longer weighs and retains the only advantage of its very high payment ceiling (61,200 euros).
But this has not always been the case: before 2015, money placed on a PEL yielded more than 2%. Its yield had even risen to 3.27% from 2000 to 2003 and exceeded 4% before 1994. Remunerations from which some savers still benefit.
It was only in 2011 that the regulations limited the lifespan of the plans to 15 years. Those subscribed before 2011 continue to accumulate interest for an unlimited period, at the rate set at the time of the contract, which logically encourages some savers to keep them. Despite the spirit of the ELP, originally conceived as a medium term investmentmaking it possible to obtain a loan on advantageous terms to buy real estate or finance work.
Housing savings plan: how the PEL works
An annuity for elderly holders
This situation, the Court of Auditors denounces in a report published Monday, September 5, 2022. The institution believes that the ELP has been diverted from the historical objective of home ownership to become a long-term savings product. Old PELs are similar to a real annuityto the benefit in particular of senior holders with high outstandings.
The Court of Auditors thus joins the chorus of critics of the old PEL. There are also the banks, which distribute the product and pay the interest. These old PELs are no longer in line with the market today and constitute a significant cost for the financing of the economy, explains the French Banking Federation (FBF). If PELs opened before 2021 were remunerated at the rate in force for new PELs, i.e. 1%, this would result in a gain of around 3.9 billion euros in terms of resources for financing the French economy, confirms the Court of Auditors, referring to calculations by the Banque de France.
According to the latter, the PEL opened before 2011 represented last year 107.7 billion euros with an average remuneration of 4.5%against 3.04% for all PELs.
411million euros of annual bill for the state
PELs also cost the state money because those opened before 2018 are exempt from income tax until their thirteenth birthday and allow, when they are spent on a loan, to obtain a state bonus ( up to a maximum of 1525 euros), the amount of which depends on the interest received.
The Court of Auditors considers 411 million euros the cost for public finances in 2022 for these old PEL without the state withdrawing any financial return or directing the resource towards jobs of general interest as is the case for the booklets regulations, she underlines. It is at least 3 times more, for example, than the cost of the tax exemption of the interests of the Livret A, figure 131million euros.
Bank charges : up €259 savings thanks to our comparator
She recommends to think about a suppression device the advantage of old PELs over other savings products, which it considers unjustified and even disproportionate.
The Minister of Economy Bruno Le Maire replied on Monday that he had taken note of the court’s recommendations, contenting himself with saying that the Court’s finding on PELs can legitimately raise questions about the effectiveness of the allocation of this housing savings.
Closing against compensation?
Review the rate of old PELs or limit their lifespan? Not so simple: they are, in fact, governed by contracts between individuals and banks. A commitment is a commitment and it must be respected, reacted Franois Carlier, general delegate of the consumer association CLCV.
If the banks decided to lower the remuneration of old passbooks, this would lead to important disputes and damage their image vis–vis their customers, underlines the Court of Auditors. It therefore identifies other solutionslike a negotiation between the banks and their customers for close the PELs, subject to compensationor a modification of contracts by law in the name of the general interestin exchange for a commitment by the banks to finance priority projects, such as ecological and energy transition.
The FBF ensures that the profession is open to participate in the work that the Court recommends to the public authorities and favors a regulatory change in the performance of old PELs.