10 things to know about the French 'PACTE' law

Some retirement savings products, including PERP, PERCO or Article 83, will keep the same features and if you're a beneficiary, you can carry on with payments. However, you'll no longer be able to get a new plan with these old products.

The PACTE law creates a brand new retirement savings model: the savings retirement plan or Plan d’Epargne Retraite (PER) that offers several options:

• PERin (Plan d’Epargne Retraite Individuel or personal savings plan)
• PERco (Plan d’Epargne Retraite Collectif or group retirement savings plan) and 
• PERob (Plan d’Epargne Retraite Obligatoire or mandatory retirement savings plan)

Each of these is taxed advantageously according to where the money's coming from – whether it's voluntary, from employee savings or mandatory payments. The sums coming from profit-sharing, shares and employer's matching contribution continue to be exempt from income tax at the time of retirement.

The PACTE law means you can now enjoy an early access to your PER savings so you can buy your main home - and this isn't only available to first-time buyers.

However, you won't be able to withdraw the employee or employer mandatory payments which will still be released according to PERob.

The other unique situations when early access to your money is possible⁽¹⁾ are similar to the ones offered to PERP and Madelin contract holders.

The tax options at voluntary pay-ins are as follows. Either:

• payments are deductible from your income tax (within cap limits), or...
• for each payment, you can decide to relinquish the deductible payments option
  

If the money was deductible from your personal income tax at pay-in, then paid out in an annuity, the total will be subject to income tax after a 10% allowance capped at €3,850 in 2020⁽³⁾. In addition, a 17,2% social contribution on a percentage of the annuity will also be taken, depending on the age of the beneficiary on the annuity starting date⁽³⁾.

If you decide at pay-in that the money is deductible from your income tax, but then have it paid out in capital, income tax will apply on the total payments (cumulative premiums). Additionally, a single temporary levy called the Prélèvement Forfaitaire Unique (PFU) (12,8 %) is applied to any profits (interest)⁽³⁾.

Investissement Socialement Responsable (ISR) or Socially responsible investing (SRI) aims to balance economic performance with an investment's social and environmental impact by funding companies contributing to the rise of a sustainable economy and the preservation of our planet, whatever their business.

You don't need to invest in SRI certified share units - but your bank or insurer must now offer you at least one SRI certified fund within your PER framework. They must also let you know what percentage of your savings are invested in ecological transition or the NGO-sector.

Always remember that investments on accounts units are subject to market fluctuations. You may get back less than you put in and all risk is borne by the policyholder/subscriber.

Our full range of SRI certified funds:

• HSBC RIF - SRI Euro bond: funds invested in government and companies bonds issued in euros
• HSBC RIF - SRI Moderate: diversified funds invested in bonds (70%) and international shares (30%) with a euro bias
• HSBC RIF - SRI Balanced: diversified funds invested in a balance of bonds and international shares with a euro bias
• HSBC RIF - SRI Dynamic: diversified funds invested in shares (80%) and international bonds (20%) with a euro bias
• HSBC RIF - SRI Global Equity: funds invested in developed international share markets
• HSBC RIF - SRI Euroland Equity: funds invested in developed European share markets

Even if your company recommends you have a PERco, it may be worth paying into a PERin and life insurance in addition, since each offers specific tax benefits.

Your HSBC relationship manager can help you assess your situation and your objectives so you can choose the right solutions for you.

So you can benefit from the PACTE law, any HSBC PERP you own will automatically be updated to a personal savings plan, the HSBC Stratégie Retraite, our HSBC PERin.

If you previously had a Madelin contract with HSBC, it won't automatically become a PER, but you can ask for it to be switched, free of charge. Simply contact your relationship manager. If you leave your employer and you have an Article 83 contract, you can transfer your assets to the HSBC PERin.

Please note: There's no change to your life insurance tax benefits⁽³⁾.

One of the PACTE law changes promotes transferring life insurance policy to a PER from a retirement perspective. The transfer must take place before 1 January 2023 and more than 5 years before your legal retirement age. The life insurance policy must be 8 years or older. Finally, the total funds must be repaid on a PER before 31 December of the year of purchase. If all these conditions are met, you'll benefit from an additional allowance of €4,600 for one person (or €9,200 for a couple), in addition to the allowance already in force⁽³⁾.

The benefits of transferring should be considered on a case-by-case basis, including whether the objective of your life insurance policy is passing it on, re-investing or taking as cash.

You can check how much you'll save on your life insurance with our savings calculator.

With easy access to your money during your lifetime and tax benefits in the event of your death, life insurance offers many advantages if you're preparing for retirement and beyond. Life insurance is the most popular French investment because of its flexibility. 

And PER allows you to get ready for your retirement while deducting payments made from your income, enabling you to pay less tax⁽³⁾.

Combining these 2 savings plans allows you to be better prepared for retirement, while offsetting any loss of income in this new chapter of life.

Monday to Friday 08:00 to 20:00, and Saturday 09:00 to 17:30.

*Dial +33 810 246 810 from abroad (cost varies by operator).