A collective savings plan (PEE) is a savings system created by a collective agreement or employer decision. This allows employees to build medium-term savings with the help of their company.
This employee savings concept is implemented under favorable tax and social conditions:
- Exemption from income tax of the portion of the premium paid into the plan (but subject to the payment of social security contributions and a lump sum social security payment in certain cases).
- Employer contribution exempt from income tax.
- Income received under the plan is also exempt from income tax, but is still subject to social security contributions (and in some cases to the benefits package).
All companies, regardless of their legal status (including associations and liberal professions, as well as public industrial and commercial enterprises), have the opportunity to make PEE available to employees.
However, the state, as well as local governments, public hospitals and public administrative offices, do not have the ability to create such savings for their employees.
PEE is replenished:
- special participation reserve,
- profit sharing funds,
- voluntary payments to employees,
- monetized CET rights,
- transfers from another plan,
- shares received for free,
and signs with the company.
The beneficiaries of PEE are company employees or association members.
Ceiling PEE
You cannot contribute more than 25% (Salaire annuel brut perçu) of your annual gross income to PEE.
In the case of a company contribution, it is limited to three times the amount paid by the employee and is limited by agreement to not exceed 8% of PASS (annual social security ceiling). For 2021 it cannot exceed 3290.80 euros.
Beneficiary Information
Each PEE beneficiary receives an annual situation report, including:
- Identification of the company and beneficiary.
- The total amount of assets credited to the recipient's account, as assessed as of December 31 of the previous year.
- The number of assets by management, indicating the dates of availability, as well as the management methods that are defaulted in the plan provisions or selected by the beneficiary.
- A summary of amounts contributed to the plan during the past year, broken down by payment type, and amounts withdrawn from the plan during the same period, highlighting amounts received in the event of early release.
- A summary of expenses incurred by the employee during the last year under the provisions of the plan.
- The annual account statement may also include a statement of the costs incurred by the company for maintaining the securities account. This reference is mandatory when this support is terminated in the event of leaving the company, and the cost of maintaining the escrow account is recovered by deduction from the assets of the beneficiary.
The annual account statement is provided to the recipient within 3 months from December 31 of the previous year. Unless the beneficiary objects, this annual return may be filed electronically under conditions that ensure data integrity.
How does PEE work?
A company's savings plan can be financed in several ways:
- the investor can make voluntary payments,
- assign to him his participation or share in the profits,
- or even free promotions.
PEE cannot be financed by securities previously purchased by its holder. However, the irregular transfer of securities does not call into question the tax treatment applicable to PEE for securities acquired under the legal regime.
The frequency of payments is free, only the annual amount of payments is limited.
PEE rules may require a minimum annual payment for an investment vehicle. This amount cannot exceed 160 €.
Due to the prohibition of any kind of discrimination, each employee must have the opportunity to choose between all offered options of available investment instruments, if there are several of them. Therefore, it is impossible to provide different placement formulas for different categories of employees.
How to return investments in PEE?
PEE is issued for a period of at least 5 years. Longer terms may be established by the Plan rules.
Beneficiaries can retain their assets after the PEE lock-in period or even after leaving the company in case of termination, voluntary resignation and retirement or early retirement.
In certain situations, they may also withdraw funds early.
Profits from PEE realized at the end of the Plan subject to the minimum lock-in period are exempt from income tax and are subject to social security contributions.
Early release and leaving the company
Amounts from PEE or PEI are typically locked in for 5 years. As part of Perco, they are locked in until retirement.
In some limited cases, an employee may be able to request early release of amounts without losing the social and tax benefits associated with the system.
These cases of authorized early release include, but are not limited to:
- beneficiary's marriage or PACS;
- disability category 2-3 of the beneficiary, spouse or children;
- death of the beneficiary or his spouse;
- birth or adoption of a 3rd child;
- termination of an employment contract, forced retirement;
- creation or acquisition of a business;
- acquisition, renovation due to natural disaster, or expansion of a primary residence;
- victim of domestic violence (from June 6, 2020);
- over-indebtedness situation.
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;
- expiration of the right to unemployment benefits;
- acquisition of a primary residence or restoration of a damaged primary residence following a disaster recognized by an interdepartmental resolution.
Your rights if you leave the company
When leaving the company (dismissal, end of a fixed-term contract, etc.), the employee has the rights (except for Perco):
- require early withdrawal of funds;
- transfer your rights to a new employer;
- leave the funds in the company he leaves. They will be sent to him by the employer at the end of the blocking period.
The employer must provide the employee who leaves the company with a summary of all amounts and securities retained or transferred to the company under employee savings schemes.
PEE in case of owner's death
On the death of the holder, the PEE or PERCO goes into the estate and becomes available to the heirs after 6 months.
If heirs have not claimed PEE or PERCO, the account becomes inactive one year after the date of death unless any heir has notified the trustee of their desire to repay the savings.
After three years of inactivity, the savings from the plan are transferred to the Caisse des Dépôts et Consignations. Beneficiaries have 27 years to claim the amount from the Caisse des Dépôts et Consignations. Otherwise, they are finally acquired by the state.
Converting PEE to PER (individual) or PERE (PER collective)
In the current state, it is not possible to make a savings transfer from PEE to an individual PER or a new company PERE: a transfer seems only possible from a PEE to a new company PEE or a new business PERCO.
PEE advantages and disadvantages
The PEE savings plan allows employee and manager beneficiaries to build financial savings under favorable tax and social conditions. For the employee, the contribution, if it exists, represents an interesting assistance from the employer in increasing his capital.
In exchange for tax and social benefits, PEE has the disadvantage of locking the amounts invested into it for a period of 5 years. However, there are quite a few cases of early release (10 in total) but they remain limited.
Finally, PEE is a portfolio of securities. The plan beneficiary must choose between several financial investment vehicles. Some are risky and may result in capital losses because they invest in the stock market. Therefore, it is important to monitor your investments in PEE and conduct arbitrage, which is not always easy without the help of professionals.
Sources:
https://fidnet.fidroit.fr/document/38062
https://www.previssima.fr/question-pratique/quest-ce-quun-pee-et-comment-fonctionne-til.html
https://www.la-retraite-en-clair.fr/preparer-financierement-retraite/essentiel-solutions-epargne-retraite/perp-perco-devient-epargne-retraite-salariale-cas-deces
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