PERP – Subscription, release, operation

November 2017

The popular retirement savings plan (PERP) is a long-term savings vehicle. It enjoys significant tax advantages and provides an annuity at retirement.

Definition

Created in 2003, PERP (popular retirement savings plan) is a long-term savings product designed, as its name suggests, to supplement retirement Subscriber saver concerned.

Unlike life insurance and PEA, in fact, the capital built on a perp is normally paid back in the form of a life annuity. Subject to several exceptions.

Subscription

PERP can be subscribed without any age requirement, from a bank or a company or mutual insurance.

payments

The subscriber can make free payments at their own pace, or programmed.

No amount condition is imposed.

Operation

The perp works as a life insurance contract, including entry and management fees according to specified terms.

Savings are valued every year depending on the performance of the manager and the management profile chosen.

Each year, the manager must also communicate to the investor estimates the life annuity that will pay him.

Transfer

The contract should also specify the PERP transfer conditions of a manager to another.

Deduction payments

The amounts paid on a PERP are deductible from the total income of the subscriber, for each member of the tax household. But this deduction is capped
- or 10% of earned income from the previous year, caught a limit of 8 times the ceiling of social security,
- or 10% of the annual ceiling SS whichever is higher.

Unlocking the Perp

The Perp is blocked in principle until the age of legal retirement subscriber.

The accumulated savings are then reassigned in the form of a life annuity.

Death of Subscriber

In case of death of the subscriber before or during retirement, the pension can be paid back in the form of annuity to the surviving spouse or other beneficiary named in the contract or in the form of education allowance for her minor children.

capital output

Accumulated savings can also be recovered as a capital of 20%, the life pension for when 80% of the plan.

Alternatively capital output: the purchase of the principal residence for policyholders who did not own their own home during the two years prior to the liquidation plan.

exceptional unlocks

The law also provides opportunities for early unlocks the form of capital in the following circumstances:

  • Disability subscriber
  • expiration of unemployment benefit rights
  • death of a spouse or partner PACS
  • indebtedness
  • liquidation for non-employees.

Taxation

The annuity is subject to income tax, after the standard deduction of 10% specific to pensions.

The early exit for exceptional circumstances are exempt from income tax (excluding social security contributions).

Unique payments in the form of capital (purchase of a principal residence or partial capital output) are subject option, either income tax or a levy of 7.5%, in both cases after standard deduction of 10% for pensions.

ISF

Savings accumulated on the perp is exempt from wealth tax throughout the savings phase. Only payments made after the age of 70 are subject to wealth tax.

After the PERP unwound, the contract accumulation value is exempt provided that the following conditions are met:

  • Perp feeding duration at least 15 years,
  • premiums and payments regularly staggered,
  • liquidation of the pension after the liquidation of the pension or the retirement age for full retirement.

See as well

  • The Madelin retirement contracts for TNS
  • Need a professional? Our directory wealth advisors

See also


Download this article (PDF)
download this article (PDF