Officially launched in October 2019, the PER is finding more and more followers among investors. Are you wondering if the individual PER, replacing Perp and Madelin contracts, is for you? It all depends on your goal.
The creation of the retirement savings plan (PER) had a major ambition: to harmonize and simplify the very heterogeneous landscape of retirement savings. Exit the Perp, Madelin or other Perco: from now on, the only pure retirement savings product that you can open is called the PER. But beware, two large families of PER coexist: first the PER collective, accessible through your employer; secondly the PERs individualthe opening of which depends solely on the saver’s initiative.
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If you are mainly looking to reduce your taxes
Like the Perp or the Madelin contract so far, the individual PER is primarily a tax exemption investment. Because each payment made on an individual PER is deductible from taxable income, within the limit of an annual ceiling. By reducing your income from professional activity, you mechanically lower your income tax.
The annual deduction ceiling identical to that in force for Perp is personalized according to the situation of each tax household. It is equivalent 10% of your earned income for the past yearwith a maximum ceiling of 32,909 euros for 2022 (for salaries). But if you do not use this ceiling for one year, the amount is carried over to the following three years. The easiest way to know the retirement savings ceiling of your household? Look at your 2022 tax notice, additional information section. The tax authorities specify the ceiling for contributions paid in 2022, therefore for payments made until December 31. If ever the ceiling does not appear on your notice, the tax authorities will calculate it for you on request, via your personalized messaging system on impots.gouv.fr. Important detail for the self-employed: the annual PER ceiling is higher for self-employed workers, at the same level as the Madelin contract (1).
Please note: the presence of the retirement savings limit on your tax notice does not necessarily mean that the deduction is of interest to you! First of all, a tax deduction is obviously of interest only to taxpayers who have tax to pay. Next, the PER deduction is generally only recommended for households in the upper income tax brackets: those whose marginal tax rate (TMI), the rate applied to the highest stratum of your income, is at least 30%.
| Income bracket per tax share | Applicable rate for the tranche |
|---|---|
| Up to 10225 | 0% |
| From 10225 26070 | 11% |
| From 26070 74545 | 30% |
| From 74545 160336 | 41% |
| Over 160336 | 45% |
Barme appearing in the finance bill for 2022.
Example, for a single person with 50,000 euros of taxable income in 2021, appearing in the 30% bracket. If he pays 3000 euros on a PER, he theoretically saves 900 euros tax (30% of 3000euros) since it lowers its taxable income by 3000euros. The tax gain would clearly be less if it was in the 11% bracket: 330 euros for the same payment of 3000 euros. And it would be much higher in the 45% bracket: 1350 euros gain potential with this same payment of 3000 euros.
Also be aware that this savings having been deducted at the time of payment will be imposed upon exit, retirement age. Deducting the payments is therefore like making a tax bet: reducing your tax today, during your working life, when you are theoretically the most heavily taxed; to gradually withdraw this capital in retirement, when you will be less heavily taxed.
If you are mainly looking to save for retirement
The main reason for opening and paying into a PER is therefore to reduce taxable income, during working life. In addition, the great advantage of the individual PER vis–vis the old generation of retirement savings investments (Perp, Madelin, etc.) is its flexibility at the time of retirement: you can either withdraw all the capital savings (at once, or over several years to limit taxation), either opt for the life annuity, or both.
Retirement savings plan: what pension can you expect?
The originality of the PER also comes from its flexibility at the entrance: you can choose to waive the deductibility of payments, purely from the perspective of retirement savings. A low- or low-tax household may therefore have an interest in subscribing to a PER, provided that it expressly asks to waive deducting your payment from your banker, insurer or financial advisor. In this case, taxation will be lighter on exit, retirement age. If you choose the pensionthe allowance to which you will be entitled will be much higher than that which applies if you deduct your payments (2). If you choose the capital outflow, all the sums you have paid will be exempt from tax, only the gains being subject to the flat tax. While deducting the payments, all amounts raised are subject to income tax (and earnings to flat tax).
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Does this flexibility make the PER a real consumer product, whatever your level of taxation? If you are low taxes and want to save to prepare for your retirement, the PER is an adequate investment but not necessarily a better investment than life insurance. A PER and a life insurance most often have similar characteristics, in terms of costs, financial supports and management options. Gold life insurance has the advantage, vis–vis the PER, of offering more freedom: if necessary before retirement, you can dip into your life insurance, whereas only the purchase of a principal residence or an accident in life (disability, over-indebtedness, etc.) allows you to unlock your savings before retirement on a PER. To keep in mind before subscribing!
See the comparison of individual PER reduced fees
(1) Up to 10% of the taxable profit, to which is added 15% of the fraction of the taxable profit between one and eight PASS 2022.
(2) In the event of a deduction on entry, the free life annuity scheme applies, with taxation equivalent to that of earned income. Without deduction on entry, the expensive pension scheme applies, which is much more interesting, only 40% of the pension being taxed if you claim the pension between the ages of 60 and 69.