The French PER: The New Retirement Savings Account

Background: The 2019 Reform

Before October 2019, French retirement savings were fragmented across specialist vehicles — the Perp for private individuals, the Madelin and Madelin agricole contracts for the self-employed, the Perco for employees through company savings schemes, and Article 83 contracts for mandatory enterprise supplementary pensions. The loi Pacte replaced all of them with a unified framework under the PER brand, available from 1 October 2019. Existing products may no longer be opened for new subscribers (since 1 October 2020 for the Perp) but may be continued indefinitely. Transfers from old products to a PER are freely permitted. The PER comes in three forms: the PER individuel (open to anyone without a professional condition), the PER d'entreprise collectif (voluntarily offered by employers), and the PER d'entreprise obligatoire (mandatory for certain employee categories). This article addresses the PER individuel only.

Eligibility and Structure

The PER individuel is open to any individual, with no minimum age and no professional activity requirement (C. mon. fin. Art. L 224-1). Minors may hold a PER. Multiple PER plans may be held simultaneously — unlike the PEA, there is no one-plan rule.

Two legal forms

A PER individuel takes one of two legal forms. The PER compte-titres is a securities account held with a bank or investment firm, with a single holder and optional linked cash account (which may not be overdrawn), managed by a portfolio management company. The PER assurance is a group insurance contract, legally close to a contrat d'assurance-vie, and may include a guaranteed euro fund, provision for designated beneficiaries on death, and supplementary guarantees such as disability income, reversionary annuity, or loss-of-autonomy benefits. The insurer is subject to a statutory obligation to ring-fence PER assets separately. Transfer between institutions is freely permitted; transfer fees are capped at 1% of transferred assets, and become nil once five years have elapsed from the first contribution or once the holder has reached retirement eligibility age.

The three-compartment structure

Every PER is divided into three compartments (C. mon. fin. Art. L 224-6): compartment 1 receives voluntary individual deposits; compartment 2 receives employer contributions and employee savings scheme amounts; compartment 3 receives mandatory enterprise scheme contributions. Rights from compartments 1 and 2 (voluntary and employee savings) are freely transferable to any other PER at any time; compartment 3 rights may only transfer on leaving the enterprise. This structure ensures that on transfer, each type of contribution retains the specific redemption conditions, tax treatment, and social regime applicable to it.

Contributions and the Deduction Ceiling

The global deduction ceiling for salaried employees

Contributions to a PER individuel (excluding supplementary risk guarantees) are deductible from the global taxable income of each household member, up to an annual ceiling (CGI Art. 163 quatervicies). The ceiling is the higher of: (a) 10% of the prior year's professional income net of social charges and professional expenses, capped at 8× the annual Pass (for 2023: maximum €32,909); or (b) 10% of the prior year's Pass (for 2023: €4,114, applicable to those with no or low professional income). Married and PACS couples under joint taxation may pool individual ceilings. Unused ceiling carries forward and may be applied in any of the three following years. Excess contributions above the ceiling are not deductible and do not carry forward.

Deduction from professional income: self-employed and corporate officers

For holders with BIC, BNC, agricultural income, or article 62 corporate officer remuneration, PER contributions are deductible from their professional income category within specific limits (CGI Art. 154 bis and 154 bis-0A). Professional income deduction takes priority; any remainder may be deducted from global income. For 2023, the maximum professional income deduction for retirement savings (including death, disability, and loss-of-autonomy supplementary guarantees) is €81,385.

Waiving the deduction

The holder may elect, on a contribution-by-contribution basis, to waive the deduction (C. mon. fin. Art. L 224-20). The waiver must be exercised at the time each contribution is made through the plan manager, and is irrevocable per contribution. Where waived-contribution principal is fully exempt from income tax at exit — with only the investment returns facing taxation — waiving the deduction can be advantageous where the holder has no current income tax liability, a very low marginal rate at entry, or expects a high marginal rate at exit.

Investment Management

Unless the holder makes an express contrary decision, all contributions are automatically managed under a lifecycle allocation (gestion pilotée évolutive) that gradually reduces risk as the target retirement date approaches (C. mon. fin. Art. L 224-3 al. 3 and 4). Three profiles are available: prudent, balanced (the default), and dynamic. Self-directed management is available on express written request. The lifecycle allocation does not guarantee capital. From five years before the projected retirement date, the holder may review their accumulated rights with the manager.

These are regulatory minimums for low-risk assets (risk indicator ≤ 3) as a share of total plan assets. The manager must proactively inform the holder of the option to review six months before the five-year review window opens.

Early Release: The Six Authorised Events

PER savings are ordinarily locked until retirement. The law provides six exhaustive events permitting early release (C. mon. fin. Art. L 224-4 I), each triggering a single capital payment covering all or part of the eligible rights at the holder's choice:

• Death of the spouse or PACS partner
• Severe disability (2nd or 3rd category under French social security) of the holder, their children, their spouse, or their PACS partner
• Over-indebtedness (surendettement) of the holder
• Expiry of unemployment insurance entitlements, or — for former corporate officers without an employment contract — the absence of any employment contract or board mandate for at least two years from the non-renewal or revocation of the mandate
• Judicial liquidation of a non-salaried activity, or any situation certified by the president of the commercial court handling a conciliation procedure as justifying early release
• Acquisition of the primary residence — a PER-specific provision absent from the Perp and Madelin

For the first five events (force-majeure situations), the capital paid is fully exempt from income tax and social charges, except that investment returns are subject to social charges at 17.2%. For the sixth event (primary residence acquisition), the exit is taxed as an ordinary retirement capital exit following the deducted/non-deducted rules — a chosen event receives no preferential tax treatment.

Exit at Retirement

At retirement — defined as the date of liquidation of the holder's pension under any mandatory scheme, or the minimum legal retirement age (62 for those born on or after 1 January 1955) — the holder may freely choose between a capital lump sum (in one instalment or in stages), a lifetime annuity, or a combination of the two (C. mon. fin. Art. L 224-5). Where the annuity option produces less than €100 per month (since 1 July 2021), the insurer may substitute a capital payment. Irrevocably electing the annuity option at the plan's opening is rarely advisable given its irreversibility.

Exit Tax Treatment: The Core Trade-Off

The tax treatment at exit depends on two variables: whether the underlying contributions were deducted or not, and whether the exit is in capital or annuity form. All four combinations produce materially different outcomes.

Death During the Savings Phase

The PER closes automatically on the holder's death before retirement (C. mon. fin. Art. L 224-4 II). For a PER compte-titres, assets enter the taxable estate under ordinary succession rules. For a PER assurance, assets are paid to designated beneficiaries following the life insurance succession regime:

• Death before age 70: each beneficiary receives up to €152,500 free of the death benefits levy. Above the threshold: 20% up to €700,000 then 31.25%. Reversionary annuities are exempt.
• Death after age 70: contributions paid after age 70 are subject to inheritance tax under ordinary rules, after a global €30,500 exemption shared with all other life insurance contracts written on the same life (CGI Art. 757 B). Investment gains on post-70 contributions are exempt.

If the PER was already paying an annuity at the time of death, payments stop unless a reversionary annuity option was subscribed at the time of activating the annuity.

The Annuity: Practical Considerations

The annuity does not begin automatically at retirement — the holder must make a written request with proof of pension liquidation. The older the holder at activation, the higher the annuity amount. A rente à annuités garanties — under which payments continue to a named beneficiary for a fixed guaranteed period if the holder dies early — is generally preferable to a full reversionary annuity: it is less expensive, allows the holder to receive the full amount if they outlive the guarantee period, and achieves broadly similar protection. Once a PER assurance is converted into an annuity, the holder loses access to the capital permanently — there is no switching back. This irreversibility reinforces why irrevocably electing the annuity option at the plan's opening is rarely advisable.

The Old Perp: Still in Force for Existing Holders

The Perp was closed to new subscribers from 1 October 2020. Existing holders may continue contributing indefinitely. The principal differences from the PER are: the Perp locks funds entirely until retirement (no primary residence early release provision); at retirement, a full capital exit is not available — the Perp delivers primarily a lifetime annuity, with a maximum 20% capital exit in contracts that provide for it. Transfer from a Perp to a PER individuel is permitted; transfer cost is capped at 5% of transfer value if the Perp is less than ten years old, nil after ten years (C. ass. Art. R 132-5-3). Amounts transferred from a Perp are treated as voluntary contributions but do not generate a new deduction right.

This article is provided for general information and educational purposes only. It does not constitute financial, tax, or legal advice. The deduction ceilings and Pass-related figures cited apply to contributions made in 2023; the Pass changes annually. The death benefits treatment for PER assurance depends on age, contract structure, and beneficiary designation.