Because these investments make it possible to build up an annuity or capital, life insurance and retirement savings plans are particularly well suited to preparing for retirement. As pension reforms follow one another, it is more important than ever to provide additional income for after working life. But which contract to choose? Lighting.
Life insurance, more flexibility
With around 1.8 trillion euros outstanding, life insurance is by far the preferred investment of the French. This savings product has, it is true, several advantages:
- its performance;
- its flexibility;
- its tax advantages.
The subscriber can make regular or one-off payments of the amount he wishes. It can also buy back all or part of the capital constituted at any time. However, this operation must be considered: the tax on the gains (capital gains) received at the end of the redemption varies according to the length of the contract, the date of payment and possibly the amount of outstanding (taking into account includes all life insurance policies held by the saver):
- If the gain is from a payment made before September 27, 2017 :
- Contract of less than 4 years: scale of income tax (IR) and social security contributions (CSG, CRDS, solidarity levy) at 17.2% OR, optional, flat-rate withholding tax (PFL) of 35% and social security contributions at 17.2%.
- 4 to 8-year contract: scale of IR and social security contributions at 17.2% OR, optional, PFL of 15% and social security contributions at 17.2%.
- Contract of more than 8 years: scale of IR and social security contributions at 17.2% OR, optional, PFL of 7.5% and social security contributions at 17.2%.
- If the gain is from a payment made after September 27, 2017
- Contract of less than 8 years: single flat-rate deduction (PFU) at 30% (12.8% for IR, 17.2% for social security contributions) or, as an option, scale of IR and direct debits social at 17.2%.
- Contract for more than 8 years and outstandings less than or equal to 150,000 euros: PFL at 7.5% and social security contributions at 17.2% OR, optional, IR scale and social security contributions at 17.2%.
- Contract of more than 8 years and outstandings greater than 150,000 euros (for all life insurance contracts combined): PFL at 7.5% and social security contributions at 17.2% OR, as an option, scale of IR and social security contributions at 17.2% for the fraction less than or equal to 150,000 euros; PFU at 30% or, as an option, the IR scale and social security contributions at 17.2% for the fraction over 150,000 euros.
At any time, the subscriber can opt for:
- an exit from the'' full capital ;
- of partial redemptions programmed;
- The payment of a life annuity, that is, served until death.
PER, an annuity and / or a capital for retirement
As its name suggests, the retirement savings plan (PER) is a product dedicated to retirement. Quite close to life insurance, it is fed with the same flexibility through voluntary payments. However, funds are blocked until retirement, unless one of the following accidents of life occurs:
- Death of married spouse or PACS partner.
- Invalidity of the insured, of the married spouse, of the PACS partner or of a child.
- Expiration of unemployment benefit rights.
- Cessation of a self-employed activity following judicial liquidation.
The major advantage of PER lies in its taxation. Not only are the gains not taxed as long as the capital is blocked, but voluntary payments are deductible from taxable income. This tax deduction may not exceed 10% of the annual social security ceiling (Pass) for the previous year or, if the formula is more advantageous, 10% of the income for the previous year within the limit of eight times the Pass of the previous year. The voluntary payments made this year may thus be deducted up to a minimum of 4,052 euros or up to 32,419 euros from the income received in 2020 to be declared in 2021.
Self-employed workers (craftsmen, traders, entrepreneurs, liberal professions) may benefit from a higher deduction ceiling. This is equivalent to 10% of the Pass for the year of payment or 10% of the taxable profit for the year of payment within the limit of eight Passes for the year of payment, increased by 15% of the fraction between one and eight Pass for the year of payment. Or, for voluntary payments made in 2020, a deduction of at least 4,113 euros and of 76,101 euros at most.
At retirement, the subscriber can decide to withdraw either in annuity, in capital (in one or more times) or to mix both an annuity and a capital.
Note: it is possible to release the funds of a PER before retirement to acquire your main residence.
PER vs life insurance: the profitability match
Both contracts are based on the same financial supports. PERs and multi-vehicle life insurance contracts include a secure euro fund (the capital is guaranteed) and one or more units of account potentially more profitable because they consist of shares and / or units in real estate investment companies ( SCPI).
It is too early to know the average return on PER because this product has only been marketed since October 1, 2019. Being invested in media identical to that of life insurance, it should record equivalent performance, but a more interesting profitability of the fact of the absence of social security contributions in the process of building up savings.
In addition, the tax deduction offered by the PER generates a financial advantage. A saver who pays 100 euros into the PER and who is subject to the marginal tax bracket (TMI) at 30% will have 30 euros less tax to pay. So he sort of placed 130 euros on his PER, compared to 100 euros with a life insurance policy.
Which contract for your situation?
The match between life insurance and PER does not necessarily have to be: the two products are complementary. The PER wins out among heavily taxed savers because it offers particularly attractive tax deductibility for voluntary payments. Life insurance, for its part, allows you to have capital at any time, in the event of the unforeseen.