The Retirement Savings Plan or PER has replaced other retirement investments since 2019. It is a long-term savings plan that allows you to prepare for your retirement while benefiting from advantageous taxation. Here is a practical guide to better understand the retirement savings plan in 6 questions.
The Retirement Savings Plan is an investment that was created by the Pacte law in May 2019 to replace other retirement investments such as PERP and PERCO.
This savings product, available since October 1, 2019, comes in three different forms:
• an individual PER that replaces PERP and Madelin contracts
• two company PERs: the collective PER that replaces PERCO and the mandatory PER that replaces article 83.
The individual retirement savings plan is a long-term savings plan that allows you to fulfill a dual objective:
- Save money during your working life to prepare for your retirement
- Benefit from additional income once you are retired.
This investment offers several advantages for the saver. On one hand, it allows you to benefit from favorable taxation.
On the other hand, it allows you to receive either an annuity or a lump sum, meaning you can choose to receive a lifelong annuity or a lump sum at the time of your retirement, or even a combination of both options.
The individual retirement savings plan is an investment open to everyone. You do not have to meet any age or professional requirements to benefit from it.
Whether you are an employee, self-employed, or unemployed, you have the possibility to subscribe to this savings product with an insurance company or a financial institution like Perlib.
When opening this savings plan, the managing organization is obligated to inform you about the characteristics of this financial investment, its management method, and its taxation.
Note: if you have an old retirement investment such as a PERCO or a PERP, you can transfer them to your individual retirement savings plan.
The individual PER is a retirement investment funded by voluntary contributions. This means that you can make one-time or regular contributions to it at your own pace.
Unless there is an early withdrawal, your savings are locked until your retirement. The cases of early withdrawal include the purchase of a primary residence, over-indebtedness, as well as the death or disability of the subscriber.
Unless you choose self-management, this savings is managed by default through managed management. You simply have to choose between cautious, balanced, or dynamic management based on your investor profile.
The younger you are, the more dynamic the fund allocation is, with a majority of the money invested in stocks. The risk is then gradually reduced as your retirement date approaches.
If you are subject to income tax, your retirement savings plan allows you to reduce the overall income you declare. You can indeed choose a tax advantage on your voluntary contributions.
The amounts paid into this savings plan during a year are deductible from your taxable income, within the limit of an overall ceiling set for each member of your tax household.
For each contribution to your individual PER, you have the choice between a deductible contribution from your taxable income or a non-deductible contribution. If you opt for a non-deductible contribution from your taxable income, you will benefit from a tax advantage at the time of the plan's withdrawal.
The tax regime for the annuity or capital that you will receive upon withdrawal is different depending on whether or not you have deducted the voluntary contributions from your taxable income. It is up to you to choose the best option for you, based on your tax rate.
It is interesting to choose non-deductible contributions if you are not subject to income tax, on a regular or occasional basis, or if you have already exceeded the annual deduction limit. You will then be able to benefit from a reduced tax burden upon withdrawal from the retirement savings plan.
To choose the right retirement savings plan, don't forget to consider the entrance, management, and arbitration fees that reduce the return on your investment.
Also, prioritize a specialized organization in retirement savings. On Perlib.fr, it is possible to subscribe to an online Retirement Savings Plan in a few minutes and benefit from expert advice to define your investment strategy based on your investor profile and values.
Author Audrey on 27 September 2023
Economy and Finance : Finance
Author Audrey on 06 September 2023
Economy and Finance : Insurance