The law Covenant promises of change. In the meantime, here is the detail of investments in order to draw a pension.

What better way to become annuitant… that an investment distribution of annuities ? This statement of the obvious does not of itself. Many products have been created to enable their subscribers to receive income for life from retirement. An appropriate response to the concern of investors not knowing what income they will have after they have ceased to work.

But there remains a large segment of people wary of these investments into a life annuity and wishes to be able to transmit a capital to their children. This is why, even if they know a certain amount of success with over 200 billion euros in loans, the development of products specifically designed for retirement remains modest compared to the 1700 billion euros placed in life insurance.

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The reform of the retirement savings in preparation therefore aims to render the first more attractive. “In the framework of the project of the law Covenant, the government has decided to ensure the portability of the four products for retirement savings the following : Perco, article 83, Perp and Madelin,” says Philippe Crevel, director of Circle of savings. This is to facilitate the transfer of savings from one product to another.” The reform would harmonise the taxation and the rules of the game of these solutions, which is already quite close. The Express examines their commonalities and their differences.

1. Life insurance

With nearly 15 million subscribers and 1,700 billion euros of savings, life insurance remains the preferred investment of the French. She has multiple assets, whether to draw additional resources or to submit a capital. The preparation of the pension remains the primary motivation for 27% of holders of life insurance, according to a study from the French Association of insurance (AFA), in front of the transmission (16%) and precautionary savings (14 %).

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In view of the retirement capital can be converted to a life annuity, partially exempt, depending on the age at the time of this conversion. The exemption is of 60% if the annuitant chooses this option between 60 and 69 years, and 70% if they wait 70 years to collect his pension. Attention, there is more capital to be passed in this case. Many investors forgo this choice for this reason, preferring to draw on their reserves as their needs. If it has not been converted into an annuity, the capital is transmitted in the event of death is exempt from inheritance tax up to 152 500 euros per beneficiary.

2. PEA

More exposed to the ups and downs of the stock market that the life insurance, the savings Plan in shares (PEA) is preferred by investors to manage a portfolio of shares or fund of investments in companies of the european Union. It allows you to invest up to 150 000 euros and the earnings will not suffer that the social levies (currently 17.2%) in case of withdrawal after five years (eight years to avoid the closure of the PEA).

The PEA is also appropriate for retirement since it is possible, to the maturity of the plan at the end of eight years, of the convert into a life annuity. The annuities of the PEA are totally exempt from income tax and partially exempt from social contributions.

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3. Perp

Established in 2003, the savings Plan popular retreat (Perp) has gained 2.4 million subscribers. It had € 2.2 billion of collection and 16.2 billion euros of savings by the end of 2016. The ranges of investments, the management options and the costs vary from one contract to another, such as for life insurance, and it may be several Perp, unlike the PEA. Usually, contributions to a Perp are deductible within the limit of 10% of taxable income, up to the limit of the social security (nearly 40 000 euros in 2018). But this measure is ineffective this year, due to the passage of deduction at source of tax on income next year.

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The resources of the pension provided by the Perp are in rapid increase, to over 500 million euros per year. In principle, this investment dedicated to the retirement only distributes annuities, taxable (the capital is blocked in case of need), but with some flexibility (we can recover 20% of the capital at retirement, and up to 100% for the purchase of his first principal residence). In practice, the outputs of the Perp fall between 7% of instalments in capital, 12% in a life annuity and 82% in the form of lump sum payments, unique. In fact, when the annuities related to investment of pension does not exceed 40 euros per month, the article A160-2 of the insurance Code to replace them by a single payment of capital.

The taxation of the Perp applies to other products, individual pension for civil servants and local elected officials, such as the Préfon or the pension supplement of the hospital (CRH). Other hybrid product, the Retirement mutual-fighter (RMC), distributed by The insurer to Franthis Mutual fund is for former military personnel involved in field operations. Their contributions are deductible from income tax and receive a boost from the State from 12.5% to 60% depending on the age and on the facts of the weapon of the subscriber.

4. Tontine

The tontine is the retirement investment by excellence. Popular in the traditional communities of many developing countries, tontines are to pool their savings for their old days, by taking advantage of gains related to the mortality of the contributors. By and large, those who die prior to the expiration of the tontine will have contributed to the lost funds, increasing the gains of the survivors, who share the capital accumulated through contributions and income from investments.

In France, the insurer, The Curator proposes a tontine modernized to compensate this disadvantage. In the event of death of the subscriber before the due date of repayment of the tontine (after 10 to 25 years), for the payment of life insurance from the outset, the beneficiaries designated by him, will receive a capital equivalent to the one placed in, largely exempt from inheritance tax. Upon maturity, the gains accruing to the policyholder to benefit from the taxation of life insurance according to the date of his payments.

5. Retirement Madelin

Created in 1994 under the leadership of Alain Madelin, minister of finance of the time, the insurance contracts Madelin allow non-salaried workers liberal professions and independent, improving their social protection, with contracts Madelin Prévoyance (health, loss of employment, and contracts Madelin Retirement. Usually, the premiums on a contract of pension Madelin are deductible from the business profits within the limit of 10% of such profits up to the limit of the social security (nearly 40 000 euros in 2018), and 25% above.

But, as for the Perp, this measure is offset in 2018. This will probably affect the collection of these contracts, which was close to 3 billion euros per year in previous years. Nearly 25 years after their inception, the pension contracts Madelin mature and have contributed more than € 450 million of resources for retirees in 2015, shared between 90% of annuity and 10% of lump sum payments, unique.

6. Article 83 retirement to defined-contribution

The pension Plans of the company (Pere) so-called “article 83”, are contracts of insurance guaranteeing the payment of an income for life to employees, subscribed to by their employers for the account of 4.3 million employees.

The contributions paid under these plans, pension savings company, are deductible from the taxable income of the employee (in the limits of 10% of income).

To benefit from the exemption from tax on the payments, these plans must abide by the strict rules of article 83 of the general tax Code (CGI). They must provide contributions to an identical rate for individuals in the same category of staff, a payment at the earliest at the age of retirement, there is a lack of output in capital and the amount of actual participation of the employer. Even if employees can make individual payments optional (VIF), they remain rare.

These investments will collect approximately € 3 billion per year and provide approximately 1.5 billion of resources each year to retirees, spread among 90% of annuity and 10% of lump sum payments, unique. In contracts of article 83, the contributions are deductible from taxable income (but subject to the CSG, CRDS and social levy). Annuities are imposed at the exit, after application of a rebate of 10%, such as pensions mandatory.

7. Article 39-retirement defined-benefit

The contracts so-called Article 39 (CGI) represent almost 40 billion euros of outstanding. They collect around € 1.4 billion per year and distribute each year to 1.3 billion euros of pension. The contracts are defined benefit pension funded by the employer, and the rights to which are conditioned to the presence in the company at the time of retirement. Sometimes referred to as the “retirement hat” because they are in addition to other pension schemes basic and complementary mandatory, in order to provide to the beneficiaries of higher replacement rates.

8. Perco

The savings Plans retirement (Perco) include 2.4 million subscribers with close to 16 billion by the end of 2017. The Perco is a savings vehicle salary available in 212 000 companies, which allows employees to place the amounts from the participation and the incentive to the company’s results, escaping the income tax. The employers with the most generous can add an additional amount up to three times the payment of employees – up to 6276 euros in 2017.

The money is normally blocked until retirement, except in the case of early release, such as for the purchase of a principal residence or at the end of rights to unemployment. So far, 100% of the outputs have been carried out by the payment of a capital, for approximately € 300 million per year.

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The Express