Two French people won a monthly pension of 20,000 euros in the EuroDreams game draw for 30 years. But what happens if the winner dies in the meantime, asks a MoneyVox reader. We’ll explain it to you.
A new game modeled on Loto and Euromillions is all the rage! EuroDreams, which has just carried out its first draw in eight European countries, made its first two winners in France. They won an unusual gain of… 20,000 euros per month for 30 years. Or the tidy sum of 240,000 euros per year and 7.2 million euros for the entire period against the purchase of an initial ticket of 2.50 euros.
Never late, when it comes to personal finances, the MoneyVox forum was consulted: La Franaise des Jeux is advertising its latest new game which promises an annuity for 30 years. (…) For those whose life expectancy is lower? No right to hope to win?, asks a participant.
The organizers took into account the scenario where the winner died before the end of 30 years. The annuity is transferable to heirs in the event of the death of the winner and the remainder due will be paid in one go to the beneficiaries in accordance with the rules of inheritance, written on the subject on the Franaise des Jeux website. Generally speaking, winnings from games of chance are not subject to income tax because they are considered exceptional. However, the winner will be taxed the following year on their new assets, this will also be the case for their heirs.
A gain whose value declines over time
A problem exists with this game: the annuity formula does not take into account the level of inflation which can reduce the value of the gain. Not being indexed to inflation, this annuity is subject to monetary erosion, explains the president of Maison Laplace Benoist Lombard BFMTV. According to his calculations, with an assumption of an annual inflation rate of 2.5%, after eleven and a half years of monthly payments, the 20,000 euros will already be worth less than 15,000 euros today. After thirty years, the pension is no longer equivalent to… 9,455 euros in real value.
In addition, the investment of a monthly annuity of 20,000 euros is much less profitable than if the winner can make 7.2 million euros grow, directly. In the second case, with a 2% investment, the gain is… 13 million euros in 30 years. Significant gains are also seen in the case where 20,000 euros would be used each month by the winner to live.
EuroDreams carries out two weekly draws, on Monday and Thursday.