Retirement Savings Plan (RIP) - Mandatory company PER

Verified 01 janvier 2024 - Legal and Administrative Information Directorate (Prime Minister), Ministry of Finance

End of the opening of the RIP to minor children

Published on 24 October 2023

A new one long-term savings product will be available on the market during the 1er quarter 2024. This is the climate savings plan, which targets the public of children and young people under the age of 21.

Funds invested in this plan will be directed to projects related to the ecological transition.

The new plan will replace the individual PER for minor children at the time of its commercialization.

The device is provided for in green industry act of 23 october 2023.

Your situation

  • This is a mandatory company PER
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The compulsory company PERP 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 the successor to the Article 83 contracts. The mandatory company PER entitles you to tax benefits and your rights are transferable to other PERs. The end of the plan is the retirement age, but with cases of early release.

The compulsory company PEP is a group pension savings plan which can be subscribed by the company for some or all categories of employees.

To be eligible for the Compulsory company BizPa, you must be a member of the category of employees to whom the employer has reserved this right.

The category of employees entitled to subscribe to the compulsory company permit 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 PER shall be implemented in a company.

It can be created by

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

The company may choose to combine the voluntary group savings plan and the mandatory group savings plan in a single plan. Old savings plans, such as Perco and section 83, can be transferred into a single plan.

Managed management

Unless otherwise stated by you, the management of the amounts paid out of the RIP follows the principle of managed management. This means that when retirement is distant, savings can be invested in riskier, more remunerative assets. As we approach retirement age, savings are increasingly being channeled into less risky assets.

The collective company PER must offer you at least one alternative investment vehicle, which notably allows you to invest in a solidarity fund.

Informing the employee

If you are one of the employees eligible for the compulsory company PER, the company must inform you of the compulsory nature of your membership in the plan.

They must also provide you with a regulation that informs you of the plan and its content.

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

  • Evolution of savings
  • Financial performance of investments
  • Amount of charges levied
  • Plan Transfer Conditions

Starting in the 5th year before your retirement age, you can ask the PER manager about exit options that are appropriate for your situation.

Payments by the employee

You can feed your mandatory company PER with:

  • Voluntary payments from you
  • Mandatory payments from you
  • Sums from the participation and profit-sharing, if the company has put in place a plan benefiting all employees
  • Money from the transfer of other retirement savings plans
  • Entitlements registered on a time savings account (TSA)
  • In the absence of the TRC, amounts corresponding to unused rest days, up to a maximum of 10 per year

Employer Payments

The compulsory company RIP may be financed by compulsory company payments.

Case of early release

The amount you pay on the mandatory company PER is frozen until you retire.

However, you can get your savings back early in the following cases:

  • Disability (you, your children, your spouse or Civil partnership partner)
  • Death of your spouse or Civil partnership partner
  • Expiry of your unemployment benefit entitlements
  • Over-indebtedness (in this case, the over-indebtedness commission has to write to the managing body of the ERP)
  • Termination of self-employed activity following a judgment on winding up by a court
  • Purchase of your principal residence (except for payments required)

Taxation of early release capital

The situation varies depending on the reason for the early release.

General case

The share of capital corresponding to the payments made to the RIP is exempt from income tax and social security contributions.

The share of capital corresponding to earnings shall be subject to social security contributions at the rate of 17.2%.

Release for acquisition of principal residence

The share of capital corresponding to voluntary payments deducted of taxable income is subject to income tax, without application of the 10%.

The share of capital corresponding to voluntary payments not deducted of taxable income is exempt from income tax. The same is true for wage savings premiums, the rights held in one time savings account (TSA) and days off not taken.

The share of capital corresponding to earnings shall be subject to the Single Flat-Rate Levy (SSP), at the rate of 30%.

The entitlements from compulsory payments are necessarily settled in the form of life annuity.

The rights arising from other payments (voluntary payments, participation, profit-sharing, TEC days, etc.) may be liquidated as annuity, capital, part of it as annuity and capital. Capital withdrawals may be split.

Entry taxation

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

This ceiling shall be equal to the higher of the following 2 amounts:

  • 10% of 2022 professional income, net of social contributions and professional expenses, with a maximum deduction of €37,094,
  • or €4,399if this amount is higher

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

Payments into an ERP of sums and entitlements from wage savings in company (profit-sharing, participation, abundances employers) are exempt from income tax.

Exit taxation

The output tax depends on the nature of the payments which fed into the RIP, and on the method of liquidation of the savings (annuity or capital).

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Voluntary payments deducted for tax purposes

Annuity Exit

The annuity paid at the time of the release of the RIP is taxable at income taxunder the pension scheme.

A reduction of 10% is deducted from the amount of the annuity. The balance is added to all your taxable income before the progressive income tax schedule.

Of social security contributions shall also apply to the share of the annuity corresponding to voluntary payments.

The share of the annuity corresponding to voluntary payments is taxable to social security contributions after deduction of an allowance fixed according to your age:

  • 30% if you are under 50 years old
  • 50% if you are between 50 and 59 years old
  • 60% if you are between 60 and 69 years old
  • 70% if you are over 69 years of age

The rate of social security contributions is 17.2%.

Capital outflow

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

The share of capital corresponding to the capital gains is taxed on income tax and social security contributions according to the rules applicable to capital products.

Voluntary payments not deducted from tax

Annuity Exit

The annuity is taxable at theincome tax, according to the applicable rules life annuities for consideration. It's a tax system that takes your age into account.

Thus, the part of the annuity taxable for income tax purposes is the amount of the annuity reduced by a reduction of:

  • 30% if you are under 50 years old
  • 50% if you are between 50 and 59 years old
  • 60% if you are between 60 and 69 years old
  • 70% if you are over 69 years of age

Of social security contributions shall also apply to the part of the annuity corresponding to the earnings generated by voluntary payments. The rate of social security contributions is 17.2%.

Capital outflow

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

The share of capital corresponding to the interest generated by the contract shall be subject to a lump-sum deduction of 30%.

This levy corresponds to income tax of 12.8% and social security contributions up to 17.2%.

You can apply to be exempt from the lump sum levy if your reference tax income for the penultimate year is less than €25,000 (€50,000 for a couple).

For revenues received in 2023, this is the 2021 benchmark tax revenue.

The application is to be sent to the financial institution that pays you the income no later than November 30 of the year preceding that of the payment (November 30, 2023 for an exemption in 2024).

In general, the institution will send you an honorary attestation form to return to the institution if you meet the conditions.

Payments from salary savings in company

Payments from wage savings in company (profit-sharing, participation, abundances of employers) can be liquidated as an annuity or as capital.

Annuity Exit

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

Capital outflow

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

Mandatory payments

Savings from compulsory payments in a company RIP are paid only as an annuity.

The annuity is taxed on income tax, according to the rules applicable to retirement pensions, and social security contributions.

But if the monthly amount of the annuity does not exceed €100However, the annuity may be converted into capital.

In this case, the share of capital corresponding to the company's compulsory payments is subject to income tax, in the category of pensions and pensions, but without application of the 10%.

The share of capital corresponding to the gains is subject to the flat-rate levy of 30%, but with the option of applying the progressive scale of income tax.

The UTP is income tax equal to 12.8% and social security contributions up to 17.2%.

But if the monthly amount of the annuity does not exceed €100However, the annuity may be converted into capital.

In this case, the share of capital corresponding to the company's compulsory payments is subject to income tax, in the category of pensions and pensions, but without application of the 10%.

The share of capital corresponding to the gains is subject to the flat-rate levy of 30%, but with the option of applying the progressive scale of income tax.

The UTP is income tax equal to 12.8% and social security contributions up to 17.2%.

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Transfer of old savings products to the compulsory company RIP

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

  • Popular Retirement Savings Plan - Perp
  • Madelin Contract
  • Prefon
  • Group Retirement Savings Plan - Perco
  • Mutual pension supplement - Corem
  • Hospital Retirement Supplement - CRH
  • Article 83 contract

FYI  

the tax advantage linked to the transfer of an insurance contract of more than 8 years to an RIP (doubling of the deductions related to detention) ceased on December 31, 2022.

Transfer of the mandatory company PER to another PER

You can transfer the accumulated savings from the mandatory company PER to all other PERs.

The transfer is possible when you no longer have the obligation to adhere to the plan (for example, the company leaves).

The 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, you can be charged a transfer fee, up to a maximum of 1% of the accumulated savings.

If you die, the plan will be closed.

The money you have saved will be repaid to your heirs or to the beneficiaries which you have designated in the contract, in the form of capital or rent.

If the plan is in the form of a securities account, the savings are included in the estate.

If it is a plan that has resulted in the enrollment of a group insurance contract, the amounts saved must be repaid 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 proportion of the sums paid on the insurance contract which exceeds €30,500 shall be subject to inheritance tax.