A collective pension savings plan (PERCO) is a savings system created by a collective agreement or employer decision. It allows employees to save for retirement with the help of their company.
From October 1, 2020, opening PERCO is impossible
In 2019, the PACTE Act created three new retirement savings plans: individual PER (PERIN), collective PER (PERECO), and mandatory PER (PERO). They coexist with older pension systems (PERCO, Madelin, Article 83, PERP, etc.).
However, payments under old pension contracts remain possible; they can also be converted or transferred to new PERs.
PERCOs opened before October 1, 2020 remain and may accept new members after that date or may be transferred to PERE.
PERCO or PERCOL?
PERCO may take the form of a collective pension plan within the company (PERCOI), which was also closed for sale on October 1, 2020. PERCOI is a multi-company retirement savings plan.
PERCO or PEE?
Under the same rules as PEE, PERCO offers the same benefits (social and tax benefits for members and companies).
However, PERCO is a retirement savings product, unlike a Company Savings Plan (PEE), which is a medium-term investment for 5 years
How does PERCO work?
PERCO supports several payment categories. As with PEE, amounts paid into PERCO are invested in the financial markets and earmarked for employee savings.
How to top up PERCO?
Payments are not required. PERCO can be replenished with:
- Amounts from profit sharing and participation or transfers from other employee savings plans.
- Rights registered in a savings account (CET).
- In the absence of CET - amounts corresponding to unused rest days, within 10 days per year.
- Voluntary limited payments.
- Additional payments from the company called contributions. This amount cannot exceed three times the amount that the employee has paid into his PERCO and cannot exceed 16% of the annual social security ceiling, i.e. €6,581.76 in 2022.
PERCOI is replenished in the same way as PERCO.
If the BENEFICIARY does not request immediate payment of his participation bonus and does not comment on the allocation of his rights, the 50% of his participation is automatically transferred to PERCO.
PERCO: withdrawal of rent or capital
PERCO's goal is to help members save for additional retirement benefits.
The liquidation of PERCO occurs automatically from the date on which the depositor's pension is liquidated in the compulsory old age insurance system.
There are several withdrawal options. However, the selected option must appear in the PERCO rules.
The basic rule of PERCO is that it pays a life annuity RVTO. However, PERCO rules may also provide for issuance in the form of capital, paid in a lump sum or in installments. The PERCO rules specify how the recipient may exercise his or her election.
In certain cases provided by law, participants may also receive early release of their PERCO investment.
PERCO and life annuity
A PERCO may provide for an exit only as a life annuity. Upon release, the PERCO management company transfers the capital comprising the annuity to the insurer.
PERCO - withdrawal of capital
If provided for by PERCO rules, the investor can return his savings in the form of capital. This is one of the advantages of PERCO.
PERCO beneficiaries may continue to enjoy some of these benefits even after leaving the company (severance, resignation, retirement or forced retirement, combination of work and pension).
Early release and leaving the company
Perco has its own characteristics. Cases of early release include, for example:
- death of the employee, his or her spouse, or a person associated with the employee through the PACS system;
- category 2-3 disability of the employee, spouse or children;
- expiration of the right to unemployment benefits;
- over-indebtedness situation;
- acquisition of a primary residence or restoration of a damaged primary residence following a disaster recognized by an interdepartmental resolution.
Ceiling PERCO
The frequency of payments is free, only the annual amount of payments is limited.
Plan provisions may require a minimum annual payment (maximum €160).
Due to the prohibition of any discrimination, each employee must have the opportunity to choose between all investment options offered, if there are several of them. Therefore, it is impossible to provide different placement formulas for different categories of employees.
Amounts paid into PERCO cannot exceed 1/4 (25%) of the previous year's annual income taxable income or even the participant's retirement or pre-retirement remuneration.
This 25% limit applies to the same financial year, regardless of the date of payment of the amounts, and also to all plans in the case of multiple plans.
In the case of simultaneous participation in several collective savings plans, the ceiling is assessed for payments made under all these plans.
This 25% limit applies to the same financial year, regardless of the date of payment of the amounts, and also to all plans in the case of multiple plans.
Company contribution
The company's contribution is a mandatory component of the plan. The assistance provided by the company cannot be less than the cost of managing the portfolio.
Payment without employee contribution
The employer has the right, if required by regulation, to make an initial payment when the employee signs up for the plan, even before the employee makes a deposit. This payment can reach 2% from PASS, or 822.72 euros for 2022 (822.72 euros for 2021 and 2020; 810 euros for 2019). This replenishment is called “replenishment”.
This payment applies only to plans introduced on or after December 4, 2008.
The employer also has the opportunity to make periodic payments from August 8, 2015, provided that this is provided for by regulations and subject to uniform distribution for all employees.
The tax and social treatment of the amounts paid will be the same as the down payment.
These payments can be up to 2% from PASS or 822.72 euros in 2022 and count towards the 16% cap applied to top-ups.
Replenishment
Company payments can also take the form of additional payments to the beneficiaries, this is the employer's contribution. The amount paid by the PER holder (and likely subject to contribution) is limited to ¼ (25%) of the employee's gross annual salary.
The employer's contribution after payment to employees must meet the double limit:
- The employer's tax-free contribution to PERCO in addition to the employee's benefits is annually limited to 16% from PASS, i.e. €6,582 for 2022 (€6,582 in 2021 and 2020; €6,484 in 2019, €6,357 in 2018, €3,276 in 2017 and 6,179 euros in 2016). This ceiling can be combined with the ceiling applicable to PEE if the employee has both PEE or PEI and PERCO.
- The contribution amount should not exceed three times the employee's salary. If the latter has multiple plans supplemented by multiple companies, it must accumulate all amounts paid to assess each of the ceilings specific to PEE, PEI and PERCO.
Translation of PERCO
Transfers from PERCO to PEE are not permitted (only transfers from PEE to PERCO are allowed). Therefore, in the event of termination of the employment contract, if there is no PERCO with the new employer, the employee retains the PERCO of his former employer.
Prior to October 1, 2020, a PERCO could only be transferred to another PERCO, regardless of whether there was a breach of the employment contract. From October 1, PERCO can be transferred to PER or PERE: it is no longer possible to transfer PERCO to another PERCO.
Transfer to PER in accordance with the PACTE law (from October 1, 2019)
It is possible to transfer the rights established under the old pension savings agreements (Perp, Madelin, Article 83, etc.) to a PER (individual or PERE). PERCOs can be converted to PERs (possibly individual PER, collective PERE, mandatory PERE). The transfer applies to all amounts available in PERCO (without distinction of their origin: profit sharing, participation, contributions, voluntary payments): these amounts include a portion of payments from employee savings plans.
The original plan manager communicates to the new manager the qualifications of payments (voluntary, mandatory, etc.) to route them to different parts of the PER and determine output taxation.
In addition, the new manager has an obligation to inform the plan holder before the transfer: he must inform him of the characteristics of the individual PER and the differences between the old and new plan.
Taxation https://www.previssima.fr/question-pratique/quels-sont-les-avantages-fiscauxet-sociauxdun-perco.html
PERCO advantages and disadvantages
In this regard, there are both positive and negative points:
Advantages
- There is no required payment.
- Early withdrawal of funds for the purchase of primary housing.
- Withdrawal of capital or annuity upon retirement.
- In the event of the death of the holder before the plan is liquidated, the ability to transfer the capital to heirs or beneficiaries.
- Favorable taxation on entry and exit.
Flaws
- Savings are not available until retirement (except in case of early retirement).
- Taxable in IFI.
- Limited number of investment instruments (mainly FCPE).
Sources:
https://www.impots.gouv.fr/portail/particulier/epargne-retraite
https://fidnet.fidroit.fr/document/38060
https://www.previssima.fr/question-pratique/quest-ce-quun-perco-et-comment-fonctionne-t-il.html
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