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Retirement Savings Plan (PAR)

Verified 01 June 2022 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Finance

The PER: titleContent is a new retirement savings product. It has been available since 1to October 2019 and gradually replaces other retirement savings plans. The PER comes in 3 forms: one individual RIP and two company RIPs. Individual RIP succeeds Perp: titleContent and Madelin contract. The collective company RIP succeeds the Perco: titleContent. Mandatory company PAR succeeds article 83 contract. You can transfer the savings of old plans already opened to your new PAR.

From 1to June 2022, banks, insurance companies and financial institutions that market life insurance contracts must post the management fees on their website. The presentation should be in the form of a standard table that groups the fees by category.

Individual PER 

The individual RIP is open to all. You can subscribe to it from a financial institution or insurance organisation. This new plan succeeds the PERP and the Madelin contract, which are no longer offered since the 1stto October 2020. Your accumulated savings on the Perp and Madelin can be transferred to the individual PAR upon request. This contract entitles you to tax benefits and your rights are transferrable to other RIPs. There are cases of early release.

Individual PAR is a long-term savings product.

It allows you to save during your working life to get, from retirement age, a capital or annuity.

The plan leads to the opening of a securities account or to membership in a group insurance contract.

The individual RIP is open to all. There are no conditions related to employment status (jobseeker, employee, self-employed worker) or age.

Individual Investment PAR

The RIP giving rise to the opening of securities account must be subscribed through a specialised business. This is a business that is a licenced provider of investment advice (credit institution, investment company, financial investment advisor).

Individual Insurance PAR

Individual RIPs giving rise to membership of group insurance contract must be subscribed through a specialised business. It is an association that undertakes group life insurance contracts (insurance companies, mutual insurance companies and insurance companies).

The individual RIP can also be opened with an additional occupational pension fund.

FYI  

the contract may be marketed by an intermediary on behalf of a group insurance association or a supplementary occupational pension fund (bank or financial advisor).

Unless otherwise indicated, the management of the amounts paid on the RIP is done on a managed basis. This means that when retirement is far away, savings can be invested in riskier, more remunerative assets. As retirement ages approach, savings are increasingly being channelled into less risky assets.

The managing body must provide you with information on the characteristics of the plan, how it is managed and how it is taxed when the RIP is opened.

Thereafter, each year, he must give you the following information:

  • Account Evolution
  • Financial performance of investments
  • Fee Amount
  • Plan Transfer Terms

From 51 In the year preceding the year of your retirement, you can ask the RIP manager about the exit options appropriate to your situation.

The individual RIP is first funded by the voluntary payments you make.

In addition, if you transfer a company RIP to an individual RIP, you may also pay the following amounts:

  • Sums from interest, participation and the abundance from your employer to a company RIP or a PERCO
  • Amounts from time savings account and assigned to your company RIP
  • Mandatory payments made on a compulsory company RIP

General case

When you have reached retirement age and have not opted for life annuity, you can request that the savings accumulated in your individual RIP be paid:

  • or capital,
  • annuity,
  • partly in capital and annuity.

The same applies to the wage savings (interest, participation, abundant, CET days) that may be transferred to your individual RIP.

FYI  

the capital can be paid out in several ways.

Before retirement age

You can recover your capital savings early in the following cases:

  • Disability (you, your children, your spouse or Civil partnership partner)
  • Death of your Civil partnership partner
  • Expiry of your unemployment benefits
  • Over-indebtedness (in this case, the commission on over-indebtedness must make the request)
  • Termination of self-employment following a judgement of liquidation
  • Acquisition of the principal residence (except for rights arising from compulsory payments).

To request the early release of the RIP, you must send a letter, preferably recommended, to the managing body with the following:

  • Certificate of identity
  • Bank identity statement of the account on which you want to receive payment
  • Justification of the exceptional situation of early release that you invoke

If you die, the plan will be closed.

Savings must be returned to your heirs or beneficiaries that you have designated in the contract, in the form of capital or annuity.

If the plan is opened as a securities account, the savings are integrated into the estate.

In the case of a plan that has led to the signing of a group insurance contract, the money saved must be returned to your beneficiaries named in the contract, according to the life insurance rules.

Please note

in the event of death after 70 years, the part of the sums paid on the insurance contract that exceeds €30,500 is subject to succession.

Tax Benefit on Voluntary Payments

Amounts paid out of an individual RIP in a year are deductible from the taxable income of that year, subject to an overall ceiling for each member of the tax centre.

You're salaried

The maximum is equal to the greater of

  • 10 % of 2021 professional income, net of social contributions and professional expenses, with a maximum deduction of €32,909,
  • or €4,114if the amount is higher.

If you do not deduct these payments from your taxable income, you will have a tax benefit on your individual RRSP.

You are independent

The maximum is equal to the greater of

  • 10 % of taxable profits in 2021, up to €329,088 + 15% of taxable profit between €41,136 and €329,088
  • or €4,114+15% of taxable profit between €41,136 and €329,088, if the amount is higher.

FYI  

if you transfer outstanding with a life insurance contract of more than 8 years on an individual PAR, you will benefit double abatement provided for in this case.

Taxation of annuity or capital

The income tax regime for the annuity or capital is different depending on whether you have deducted voluntary payments from your taxable income.

You have deducted the PAR payments from your taxable income

Annuity

The annuity paid at the time of the release of the RIP is subject to income tax in the pensions, and social levies at 17,2%.

Capital Output

The share of capital corresponding to voluntary payments shall be taxed at progressive scale of income tax, but not social security contributions.

The capital share corresponding to the products generated by the contract shall be subject to a flat-rate levy of 30%, corresponding to 12,8% for income tax and 17,2% for social contributions.

You can avoid the lump sum levy by opting for the progressive income tax scale. You must send a certificate of honour to the bank indicating that you meet the conditions for exemption. You must provide this certificate at the latest when the principal is collected.

You have not deducted the PAR payments from your taxable income

Annuity

The portion of the annuity corresponding to your voluntary payments or exempt income is taxed according to rules applicable to life annuities for consideration. Social levies apply to the 17,2% after a reduction calculated according to your age.

The remaining portion of the annuity is taxed on income tax in the pensions and social levies at 17,2%.

Capital Output

The share of capital corresponding to your voluntary payments not deducted from tax is exempt from income tax and social levies.

The capital share corresponding to the interest generated by the contract shall be subject to a flat-rate 30%. This levy is equivalent to income tax up to 12,8% and social contributions up to 17,2%.

You can avoid the lump sum levy by opting for the progressive income tax scale. You must send a certificate of honour to the bank indicating that you meet the conditions for exemption. You must provide this certificate at the latest when the principal is collected.

Transfer of old savings products to the individual RIP

You can transfer retirement savings income that existed before the 1to October 2019 on the Individual RIP:

  • Popular Retirement Savings Plan - Perp
  • Madelin Agreement
  • Prefect
  • Group retirement savings plan - Perco
  • Mutual Pension Supplement - Corem
  • Hospital Retirement Supplement - HRB
  • Article 83 contract

FYI  

up to 1to January 2023, the transfer of an insurance contract of more than 8 years to an RIP entitles the discounts linked to the detention of more than 8 years.

Transfer of the individual RIP to another RIP

You can transfer the accumulated savings on the individual PAR to all other PARs.

Transfer is free if you have held the product for at least 5 years.

If you have held the product for less than 5 years, transfer fees can be charged, up to 1% of the accumulated savings.

Collective company PAR

The collective company RIP is a plan open to all employees of a company, without any obligation to subscribe. This new product succeeds the Perco, which cannot be implemented since the 1stto October 2020. Your company can transform the Perco into a collective company. The new plan entitles you to tax benefits and your rights are transferrable to other PARs. The maturity of the plan is the retirement age, but with cases of early release.

The collective company PAR is a long-term savings product. It allows you to save during your period of activity to obtain, with the help of your company, a capital or annuity at retirement age.

All companies may offer a collective company RIP to their employees, even if they have not implemented a company savings plan (PEE).

The plan must be open to all employees. However, a seniority condition may be required (maximum 3 months).

Membership is optional, but the regulation may provide for the automatic membership of all employees. In this case, you must be informed of your membership, in accordance with the conditions laid down by the regulation. You then have 15 days to indicate that you refuse to adhere to the plan.

If you change company, you can transfer your collective company PAR

  • in your new business
  • or in an individual RIP.

FYI  

in a company of less than 250 employees, the husband or wife or Civil partnership partner of the Head of company who has the status of employee may also benefit from the collective company RIP.

The collective company RIP must be implemented in a company.

The plan can be set up on the initiative of company managers or by agreement with employee representatives. Where there is at least one trade union representative or a social and economic committee in the company (CSE), the employer is obliged to conduct a prior negotiation with them before creating the plan.

The collective company RIP can be set up at the company level, or in an inter-firm framework.

The company may choose to consolidate the optional group savings plan and the compulsory group savings plan into a single plan. Old savings plans, such as Perco and Article 83, can be transferred into a single plan.

Managed

Unless otherwise indicated, the management of the amounts paid on the RIP is done on a managed basis. This means that when retirement is far away, savings can be invested in riskier, more remunerative assets. As retirement ages approach, savings are increasingly being channelled into less risky assets.

The collective company RIP must offer you at least an alternative investment medium, which allows you to invest in a solidarity fund.

Employee Information

When you are hired, the employer must give you a wage savings booklet showing the devices in place in the company.

If the company has a Collective company RIP in place, it must provide you with a policy that informs you of the plan and its contents.

Each year, the manager must provide you with the following information:

  • Evolution of savings
  • Financial performance of investments
  • Fee Amount
  • Plan Transfer Terms

From 5th the year before your retirement age, you can ask the RIP manager about the exit options appropriate to your situation.

Employee payments

You can feed your collective company PAR with the following amounts:

  • Voluntary payments
  • Sums from interest
  • Amounts from participation
  • Rights registered on time saving account (TEC)
  • In the absence of a CET, sums corresponding to days of rest not taken, up to a limit of 10 per year.

You can also transfer funds from another company RESP, individual RESP or other retirement savings product (PERP, Madelin, Perco, etc.) to your collective company RESP.

As long as you are working in the company, the costs of managing the group RRSP are covered by your employer.

Employer payments

The collective company RIP may be supported by additional company payments, called abundance. The amount of money may not exceed 3 times the amount you have paid yourself, nor be greater than €6,582.

In addition, the company may carry out initial and periodic abundant supplies, if required by the plan.

Funds paid into the collective company RESP are frozen until you retire.

However, you can recover your savings early, especially in the following cases:

  • Disability (you, your children, your spouse or Civil partnership partner)
  • Death of your Civil partnership partner
  • Expiration of your Unemployment Insurance
  • Over-indebtedness (in this case, it is the commission of over-indebtedness which must write to the managing body of the RIP)
  • Termination of self-employment following a judgement of liquidation
  • Purchase of your principal residence (except for the mandatory payments transferred to the plan)

Once you have reached retirement age, you can request that the savings accumulated in your group company PAR be paid 

  • or capital,
  • annuity,
  • partly in capital and annuity.

If you die, the plan will not be automatically closed.

The money you saved will be returned to your heirs or beneficiaries that you have designated in the contract, in the form of capital or annuity.

If the plan is opened as a securities account, the savings are integrated into the estate.

If this is a plan that has led to the joining of a group insurance contract, the money saved will be returned to one or more of the beneficiaries you designated in the contract, depending on the life insurance rules.

Please note

in the event of death after 70 years, the part of the sums paid on the insurance contract that exceeds €30,500 is subject to succession.

Entry tax

Voluntary and compulsory payments made in a company RIP in a year are deductible from your taxable income for that year. This deduction shall not exceed an overall ceiling for each member of the tax centre.

This limit is equal to the greater of:

  • 10 % of 2021 professional income, net of social contributions and professional expenses, with a maximum deduction of €32,909,
  • or €4,114if the amount is higher.

If you do not deduct voluntary payments from your taxable income, you will only be taxed on capital gains at the time of settlement savings.

Payments in an RIP of amounts and entitlements from company wage savings (interest, participation, employer contributions) are exempt from income tax.

Exit tax

Exit taxes depend on the nature of the payments that fuelled the RIP, and how they are paid settlement savings (annuity or capital).

Tax-deducted voluntary payments

Annuity

In the case of an annuity, the income tax is calculated according to rules on pensions and pensions.

Social levies are levied only on a fraction of savings, such as on life annuities for consideration.

Capital Output

In the event of a capital outflow, the share of capital corresponding to the voluntary payments shall be taxed progressive scale of income tax.

The capital share corresponding to the capital gains shall be taxed according to rules on capital products.

Voluntary payments not tax deducted

Annuity

In the case of an annuity, the income tax is calculated according to rules applicable to life annuities for consideration.

Capital Output

The share of capital corresponding to voluntary payments not deducted from tax is exempt from income tax and social levies.

The capital share corresponding to the interest generated by the contract shall be subject to a flat-rate 30%. This levy is equivalent to income tax up to 12,8% and social contributions up to 17,2%.

Payroll Savings Payments in company

Remittances from company wage savings (interest, participation, employer bounties), can be liquidated in annuity or capital.

Annuity

In the case of an annuity, the income tax is calculated according to rules applicable to life annuities for consideration, in order to tax only the representative share of the products.

Capital Output

In case of a capital outflow, there is no income tax.

Mandatory payments

Savings resulting from compulsory payments in a company RIP shall be paid only as an annuity. The annuity is taxed on income tax, depending on rules applicable to retirement pensions, and social contributions.

Transfer of old savings products to Pereco

You can transfer retirement savings income that existed before the 1to October 2019 on the collective company RIP:

  • Popular Retirement Savings Plan - Perp
  • Madelin Agreement
  • Prefect
  • Group retirement savings plan - Perco
  • Mutual Pension Supplement - Corem
  • Hospital Retirement Supplement - HRB
  • Article 83 contract

In case of transfer of the sums saved on a Perco to a collective company savings plan, the social tax rates in force at the time of the deposits are kept.

FYI  

up to 1to January 2023, the transfer of an insurance contract of more than 8 years to an RIP entitles the discounts for periods of detention exceeding 8 years.

Transfer of the collective company RIP to another RIP

You can transfer the accumulated savings on the collective company PAR to all other PARs. Transfer is possible at any time after you leave the company.

If you are still in the company, transfer is also possible, but only once every 3 years.

Transfer is free if you have held the product for at least 5 years. If you have held the product for less than 5 years, transfer fees can be charged up to 1% of outstanding.

Company PER Required

The compulsory company RIP is a plan open to all employees of a company or reserved for certain categories of employees. The employees concerned are obliged to subscribe. This plan is a successor to the Article 83 contracts. The compulsory company RIP entitles you to tax benefits and your rights are transferrable to the other RIPs. The maturity of the plan is the retirement age, but with cases of early release.

The compulsory company PAR is a group retirement savings plan that can be subscribed by the company for certain categories of employees or for all of them.

In order to subscribe to the mandatory company Biz, you must be in the category of employees to whom the employer has reserved this right.

The category of employees entitled to subscribe to the compulsory company share must be defined on the basis of objective criteria.

If you are one of these employees, you must subscribe to the plan.

The mandatory company RIP is implemented in a company.

It can be created by

  • decision of the head of company,
  • or ratification of an agreement by a majority of employees
  • or a collective agreement.

The company may choose to consolidate the optional group savings plan and the compulsory group savings plan into a single plan. Old savings plans, such as Perco and Article 83, can be transferred into a single plan.

Managed

Unless otherwise indicated, the management of the amounts paid on the RIP is done on a managed basis. This means that when retirement is far away, savings can be invested in riskier, more remunerative assets. As retirement ages approach, savings are increasingly being channelled into less risky assets.

The collective company RIP must offer you at least an alternative investment medium, which allows you to invest in a solidarity fund.

Employee Information

If you are among the employees eligible for the compulsory company RIP, the company must inform you that your membership in the plan is compulsory.

It must also provide you with a rule that informs you of the plan and its contents.

Each year, the manager must provide you with the following information:

  • Evolution of savings
  • Financial performance of investments
  • Fee Amount
  • Plan Transfer Terms

From the 5th year before your retirement age, you can ask the RIP manager about the exit options appropriate to your situation.

Employee payments

You can supply your required company PAR with:

  • Voluntary payments from you
  • Mandatory payments from you
  • Amounts from participation and interest, if the company has implemented a plan benefiting all employees
  • Transfers of other retirement savings plans
  • Rights registered on time savings account
  • In the absence of a CLC, amounts corresponding to days of rest not taken, up to a limit of 10 per year

Employer payments

The compulsory company RIP can be funded by compulsory company payments.

Money you pay on the required company PAR is locked in until you retire.

However, you can recover your savings early, especially in the following cases:

  • Disability (you, your children, your spouse or Civil partnership partner)
  • Death of your Civil partnership partner
  • Expiration of your entitlement to unemployment benefits
  • Over-indebtedness (in this case, it is the commission of over-indebtedness which must write to the managing body of the RIP)
  • Termination of self-employment following a judgement of liquidation
  • Purchase of your principal residence (excluding the amounts from the mandatory payments)

Duties resulting from compulsory payments are necessarily liquidated in the form of life annuity.

The rights arising from other payments (voluntary payments, participation, interest, CET days, etc.) may be liquidated in annuity, capital, part annuity and capital. Capital withdrawals can be split.

Entry tax

Voluntary and compulsory payments in a company RIP in a year are deductible from this year's taxable income. This deduction shall not exceed an overall ceiling for each member of the tax centre.

This limit is equal to the greater of:

  • 10 % of 2021 professional income, net of social contributions and professional expenses, with a maximum deduction of €32,909,
  • or €4,114if higher

If you do not deduct voluntary payments from your taxable income, you will only be taxed on capital gains at the time of settlement savings.

Payments in an RIP of sums and rights derived from wage savings in company (interest, participation, abundance employers) are exempt from income tax.

Exit tax

Exit taxes depend on the nature of the payments that fuelled the PAR, and how the savings (annuity or capital) were liquidated.

Tax-deducted voluntary payments

Annuity

In the case of an annuity, the income tax is calculated according to rules on pensions and pensions.

Social levies shall be applied only on a fraction of the savings, calculated on the basis of the age of the holder, as in the case of life annuities for consideration.

Capital Output

The share of capital corresponding to the voluntary payments deducted from tax shall be taxed progressive scale of income tax and exempt from social security contributions.

Capital gains are taxed on income tax and social levies according to rules on capital products.

Voluntary payments not tax deducted

Annuity

In the case of an annuity, the income tax is calculated according to rules applicable to life annuities for consideration.

Capital Output

The share of capital corresponding to voluntary payments not deducted from tax is exempt from income tax and social levies.

The capital share corresponding to the interest generated by the contract shall be subject to a flat-rate 30%. This levy is equivalent to income tax up to 12,8% and social contributions up to 17,2%.

Payroll Savings Payments in company

Remittances from company wage savings (interest, participation, employer bounties), can be liquidated in annuity or capital.

Annuity

In the case of an annuity, the income tax is calculated according to rules applicable to life annuities for consideration, in order to impose only the representative share of the products.

Capital Output

In case of a capital outflow, there is no income tax.

Mandatory payments

Savings resulting from compulsory payments in a company RIP shall be paid only as an annuity. The annuity is taxed on income tax, depending on rules applicable to retirement pensions, and social contributions.

Transfer of former savings products to the compulsory company RESP

Retirement savings products existing before 1to October 2019 can be transferred to the mandatory company RIP:

  • Popular Retirement Savings Plan - Perp
  • Madelin Agreement
  • Prefect
  • Group retirement savings plan - Perco
  • Mutual Pension Supplement - Corem
  • Hospital Retirement Supplement - HRB
  • Article 83 contract

FYI  

up to 1to January 2023, the transfer of an insurance contract of more than 8 years to an RIP entitles the discounts linked to the detention of more than 8 years.

Transfer from the required company RIP to another RIP

You can transfer the accumulated savings to the required company PAR on all other PARs.

Transfer is possible when you are no longer required to join the plan (e.g. company departure).

Transfer is free if you have held the product for at least 5 years.

If you have held the product for less than 5 years, the transfer fee can be charged up to 1% of the accumulated savings.

If you die, the plan will be closed.

The money you saved will be returned to your heirs or beneficiaries that you have designated in the contract, in the form of capital or annuity.

If the plan is opened as a securities account, the savings are integrated into the estate.

In the case of a plan that has led to the joining of a group insurance contract, the money saved must be returned to the beneficiaries you designated in the contract, according to the life insurance rules.

Please note

in the event of death after 70 years, the part of the sums paid on the insurance contract that exceeds €30,500 is subject to succession.