The Perp, Plan D'épargne Retraite Populaire, Translates To The Popular Retirement Savings Plan In English.
In terms of retirement savings, countries like Switzerland and Anglo-Saxon countries are ahead of France. Created by the Fillon law on pension reform of August 21, 2003, the Popular Retirement Savings Plan or PERP allows for the creation of a life annuity to supplement your income and provides tax benefits.
Definition
The Popular Retirement Savings Plan is an individual and optional life insurance contract. It is accessible to everyone and allows individuals to build up additional income for retirement by making voluntary or periodic contributions throughout their working lives, with no obligation to make a minimum annual payment. This savings can only be accessed upon reaching retirement age or at 60 years old. Contributions made to the plan cannot be withdrawn before retirement, except in cases of disability, expiration of unemployment benefits, or bankruptcy. Regardless of the type of PERP, the savings are paid out as a lifelong annuity, in addition to the regular retirement benefits.
The different forms of PERP
There are 4 types of PERP, the most common of which resembles a multisupport life insurance with a euro fund and stock funds in units of account, with a progressive safeguarding of savings.
The capital acquired at retirement age is transformed into an annuity based on the technical conditions in force at that time.
Regardless of the product you choose, mechanisms for reversion (lifetime annuity to the surviving spouse or any other expressly designated beneficiary, or education annuity for minor children) can be provided in the event of death during the contribution phase or the annuity phase. It is in your best interest to opt for the most flexible contract possible.
PERP and acquisition of the main residence as a first property.
The PERP also allows its members to build up savings, under certain conditions, for the acquisition of their main residence through first-time homeownership.
At the end of the plan, these savings will be paid out as a lump sum, subject to income tax. Upon explicit and irrevocable request from the member, this taxation can be spread over 5 years, divided equally.
Subscription to a PERP
To subscribe to a PERP, it is necessary to subscribe to an insurance contract concluded between an association, the individual savings group for retirement (GERP), and a managing insurance organization (a provident institution, an insurance company, or a mutual).
The association (GERP) is responsible for protecting the interests of participants in popular retirement savings plans.
Mandatory information
The PERP management body is required to regularly inform the subscriber of the account's evolution.
The management body may also deduct account management fees and must inform subscribers annually of the amount of these fees.
Safety of savings
The guaranteed savings term by the insurer must not be less than a certain amount, in accordance with a rule of progressive securing of rights approaching retirement.
Less than two years before the subscriber's retirement, at least 90% of the accumulated savings must be guaranteed by the insurer, between two and five years, this share is at least 80%, between five and 10 years, it is at least 65%, between 10 and 20 years, it is at least 40%.
To ensure better security for savings, the profits from the financial management of the PERP are allocated only to plan participants and the plan's assets are also protected in the event of the plan manager's bankruptcy.
Any transfer of a Popular Retirement Savings Plan can only be made to another plan.
Taxation
The contributions made by each member of the tax household to a PERP are deductible from taxable income up to 10% of the latter and up to €24,854 for 2006.
The savings are exempt from wealth tax, but the life annuity is subject to income tax, like any pension, at a rate depending on the age of the beneficiary at the time of the annuity payment.
Profitability
The profitability of a PERP (retirement savings plan) varies depending on investment choices and stock market trends. However, the degree of exposure to stock market fluctuations decreases as the beneficiary approaches retirement age.
This form of savings is particularly interesting for high-income individuals close to retirement age. For others, it is better to choose life insurance and employee savings plans (PEE and PERCO).
