Established by the Pacte law and launched on October 1, 2019, the PER is celebrating exactly its 5th anniversary. A period during which it was able to establish itself in the retirement savings landscape in France, attracting millions of savers thanks to its flexibility and tax advantages.
In 2023, more than 10 million people had a PERwith a total outstanding amount reaching 102.8 billion euros. But can we really speak of success?
An undeniable enthusiasm for the PER
The figures speak for themselves: at the end of 2023, the PER had more than 10 million holders, including 6.5 million for individual PERs alone. Massive adoption, generally explained by the simplicity and transparency it provides, compared to old systems such as PERP, Madelin contracts or PERCO. Moreover, the overall outstanding amount exceeded the symbolic bar of 100 billion euros at the start of 2024and is expected to reach 110 billion euros by the end of the year.
The PER owes this success to several factors. First, its tax advantages since the payments made there are deductible from taxable income, up to 10% of annual income. Also flexible, it allows savers to choose between a capital outflow or an annuity once they reach retirement.
Although the capital is in principle blocked until retirement, exceptions existparticularly for the purchase of a main residence or in the event of difficulty, an option particularly appreciated by young professionals and low-income households.
New things to come
The PER is distinguished by its horizon-driven management method, which adjusts investments according to the age of the saver and their proximity to retirement. Funds are initially invested in riskier assets to maximize returns, before gradually being transferred to safer assets as retirement approaches. This system is adapted to three profiles: cautious, balanced and dynamic.
From October 24, 2024, two important changes are expected. The first concerns standardization of management profiles : a prudent profile must invest at least 50% of assets in low-risk assets, compared to 20% for dynamic profiles. The second novelty consists of integrate more unlisted assets and European Long-Term Investment Funds (FEILT) in portfolios, to finance the real economy.
If everything seems to indicate the success of the PER, it is crucial to note that its subscription must be accompanied by certain precautions. As the Fortuny firm, which has been supporting savers for around ten years, points out, it is important to get good advice before choosing a PER. The firm helps investors evaluate available options and choose a plan that fits their financial goals. A contact form is available below to get in touch with one of their advisors.
Some weaknesses but a promising future
Although the PER is widely acclaimed, some criticisms persist, particularly with regard to management, payment and arbitration fees. These fees, which vary depending on the managers, can limit the performance of savings in the long term. Additionally, transfer fees, which can reach 1% in the early years, complicate portability between different institutions.
Despite these few weaknesses, the PER has established itself as an essential pillar of retirement savings in France and seems well on track to continue this momentum in the years to come.
