The information could have gone unnoticed. In the heart of summer, a order of the Ministry of the Economy raised the minimum threshold of “redemption of annuities” from 100 euros to 110 euros for retirement savings. Simple technical detail? Far from there. Many savers holding a life annuity exit contract are likely to benefit from it.
To understand, you need to know the mechanism.
At retirement, at the end of the retirement savings product, you transfer your capital to an insurer who undertakes to pay you in exchange a regular amount for life: the annuity. Logically, the more the contract, the higher the annuity. But when the amount saved does not allow a certain level of monthly income to be reached, insurers may decide to pay a capital sum in place of the annuity, because managing these modest envelopes is costly and time-consuming for them.
This minimum pension level to be achieved, historically very low, was increased in 2021 to reach 100 euros. In the context of inflation, the government now opens, since July 22, this possibility as long as the monthly pension is less than 110 euros. This represents an amount of savings on the contract of around 30,000 euros if the buyout occurs at age 65, Bercy said in a press release.
Many schemes are affected, including the old PERP (popular retirement savings plans, which were accessible to all), Madelin (reserved for non-employees), Prefon (for the civil service) and “article 83” contracts (compulsory retirement savings scheme implemented in certain companies) – as many products including marketing ceased in 2020 but which can be kept by their holders. The new retirement savings plan (PER) established by the Pacte law in 2019 is also covered, but only for sums from compulsory retirement savings.
The saver has the choice
The common point between all these investments: withdrawal into a life annuity upon retirement is compulsory (with the exception of the latest generation PERP and Préfon, which allow 20% of capital savings to be withdrawn).
For savers wanting to recover their money in the form of capital, this is good news. Better, the decree now gives them the choice: they can keep the annuity if they wish, the insurer must now obtain their consent.
“There is another new thing : this capital exit option can be exercised at the time of liquidation of the contract but also when the annuity is being paid”points out Henri Réau, development director of the broker Placement-direct.fr. In other words, it is extended to retirees, on the remainder of their system.
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