The PER is intended to replace older retirement savings products, notably the PERCO. However, PERCOs do not automatically disappear, and it is possible to keep them or transfer them to benefit from the advantages of the PER.
So is it better to keep your PERCO or transfer it to a PER?
1. Our answer
Yes, it's often a good idea to transfer your PERCO to a PER, mainly to benefit from more favorable tax treatment in the event of death, and to optimize the company's deduction and matching contribution.
To determine the best option, several points need to be analyzed.
Please note:
The choice of transfer is not always left to the subscriber: some companies impose the transformation of their PERCO into a collective PER: and the subscriber cannot oppose this.
The conversion can also be decided by the employer: the employee (subscriber) cannot oppose it (the employer must also inform employees of the consequences of this transfer, the characteristics of the new plan, and the differences with the Article 83 contract).
CMF. art. L. 224-40, IV
The subscriber can also choose to transfer the sums held in his PERCO to his individual PER (the PERCO then remains in place after the transfer, and will receive future payments of profit-sharing and employer matching contributions). When the subscriber is still an employee of the company, this individual transfer is only possible every 3 years.
See our practical guide: Comparative individual PER, PERE-collectif and PERE-obligatoire and Comparative summary PER, life insurance, PERP and Contrat Madelin.
2. Why transfer your PERCO to a PER?
This is not the case for the capital withdrawal, since the sums invested in a PERCO can be recovered in capital at the time of retirement. Transferring to a PER therefore offers no advantage in this respect.
Nor is it for early withdrawal, since the PERCO allows early withdrawal for the purchase of a principal residence or the expiry of unemployment rights.
However, there are subtle differences between the PERCO and the PER in terms of early withdrawal:
Early withdrawal for the purchase of a principal residence; the PERCO allows savings to be withdrawn, among other things, in the event of an extension to the principal residence, which the PER does not allow;
Early withdrawal when unemployment rights expire: the PER can be withdrawn when unemployment rights expire as a result of redundancy, resignation or contractual redundancy, whereas the PERCO can only be withdrawn if unemployment rights expire as a result of redundancy.
On the other hand, transferring a PERCO to a PER is recommended in various cases:
A. To pass on savings in the event of death
Transferring from a PERCO to a PER reduces taxation in the event of death.
Capital held in a PERCO is subject to inheritance tax. Whereas in a PER, if it takes the form of an insurance contract (“PER assurance”), the capital is passed on to the beneficiaries designated by the subscriber with the “PER assurance” tax system:
In the event of death before age 70, the capital benefits from an allowance of €152,500 per beneficiary; CGI. art. 990 I
In the event of death after age 70, the capital benefits from an overall allowance of €30,500, after which only the surplus is subject to inheritance tax; CGI. art. 757 B
Transferring from a PERCO to a PER is therefore a good way of optimizing inheritance tax on death (whether death occurs before or after age 70).
B. Optimize payments and company matching contributions
With a PER, you can combine the income deduction and company matching contribution on the same voluntary payment. Voluntary contributions to a PERCO, on the other hand, are not eligible for income deduction.
So, to obtain the same result with a PERCO, the subscriber must make a voluntary payment into the PERCO to benefit from the company's matching contribution AND, at the same time, make a payment into his or her individual PER (to benefit from the income tax deduction): which means mobilizing more cash.
To benefit from this advantage, the PERCO must be converted into a company PER (the individual transfer of sums to an individual PER every 3 years is not sufficient).
Note:
Payments made to a PERCO entitling the beneficiary to a matching contribution are capped at 75% (1/4) of remuneration: as the law currently stands, this cap does not apply to payments made to a PER (on the PER, only the amount of the matching contribution is capped at 3 times the beneficiary's remuneration).
A company director who can benefit from his company's PER (if it has fewer than 250 employees) can take advantage of the matching contribution on his PER even if he receives little or no remuneration (unlike the PERCO).
C. To withdraw your savings earlier
By transferring from the PERCO to the PER, you can withdraw your accumulated savings as soon as you reach legal retirement age (between 62 and 64, depending on your year of birth), without having to wait until you retire. The PERCO, on the other hand, can only be unlocked at the time of retirement.
C. trav. art. L. 3334-14
The PER can be liquidated on the earlier of the following 2 events:
The date on which the subscriber reaches legal retirement age (between 62 and 64, depending on the year of birth);
The date on which the subscriber retires (this event often occurs after the legal retirement age, except in the case of retirement for a long career or disability).
Please note that in the event of a transfer from the PERCO to the PER, social security contributions will be due at the rate in force on the day of liquidation of the PER (currently 17.2%): if the sums are kept in the PERCO, the gains from payments made before January 1, 2018 benefit from the historical rates. (See our documentation: Prélèvements sociaux § 8).
D. Optimizing your IFI
Transferring from the PERCO to the PER can be useful when you want to invest your savings in real estate without increasing your IFI.
The PERCO is subject to IFI tax on amounts invested in real estate assets.
The PER, when it takes the form of an insurance contract (PER assurance), is exempt from IFI on the part invested in real estate, until the subscriber reaches the legal retirement age (between 62 and 64, depending on the year of birth).
E. Transfer in practice
a) Transformation (into a collective PER)
In the event of conversion decided by the company or the business, the cost and terms are pre-established: in principle, the costs are not billed to the employee.
b) Individual transfer (to an individual PER)
The subscriber can transfer the sums held in his PERCO to his individual PER (the PERCO then continues to exist after the transfer, and will receive future payments of profit-sharing and employer's matching contributions). When the subscriber is still an employee of the company, this individual transfer is only possible every 3 years.
CMF. art. L. 224-40, III, al 2
The transfer is made irrespective of the origin of the payments (incentive, profit-sharing, matching contribution, voluntary payment), and the accumulated savings go into compartment 2, known as the “employee savings” payments compartment.
Transfer fees do not appear to be regulated: it is therefore advisable to contact the manager to ask for the estimated cost of the transfer.
Before the transfer, the new manager must inform the holder of the characteristics of the individual PER and the differences between the PERCO and the PER.
CMF. art. L. 224-40, III, al 1
3. When should I keep my PERCO?
The PER and PERCO have many features in common, making the transfer virtually neutral (neither positive nor negative).
Keeping your PERCO may make sense for transferring your PEE. As the law currently stands, it is not possible to transfer assets held in a PEE to a PER (whether individual or company). On the contrary, it is possible to transfer a PEE to a PERCO: this transfer enables you to benefit twice from the company's matching contribution:
Or a maximum of around €3,500 for 2023 (8% of PASS) for the employer's contribution paid into the PEE ;
Or a maximum of around €7,000 by 2023 (16% of PASS) for the employer's contribution on the transfer from the PEE to the PERCO.
Note that to benefit from the matching contribution (whether to the PEE or PERCO), you must be an employee of the company: This double matching contribution is only possible if the company has set up a PERCO AND a PEE (this system does not work for employees who have a PEE in their former company and a PERCO in their new company, or vice versa).
To find out more and choose the best solution for you, please contact your local advisor at mg@capitalconseils.net.
4. References
CMF. art. L. 224-1 ; L. 224-4 1° à 6° ;L 224-4 ; L 224-5 ; L 224-25 ; L. 224-27 al 2
C. ass. art. L . 132-23 ; L. 137-15
C. mutualité art. L 223-22
C. travail. L. 3332-10 ; L. 3332-11
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