Plan d'épargne retraite: Setting up a private pension in France

If you see your long-term future in France, you might be interested in a government-backed scheme set up in 2019 to help people save for their old age - or for other projects such as buying a house.

Those who are working in France - either as salaried employees or self-employed - are automatically enrolled in the state pension system. Pension contributions are deducted from your earnings along with other 'social charges' such as healthcare charges and unemployment insurance. Then you are entitled to claim your pension once you get to retirement age.

You can find information about your French state pension HERE

The amount that you get depends on how much you paid in, and for foreigners who have only worked for a few years in France that means the French pension can be small.

Explained: How to calculate your French pension

But there is an extra option if you want to save for retirement, the Plan d'épargne retraite, known as a PER.

Who is it for?

First off, if you're American it's probably best to stop reading here and call up an accountant. Depending on the PER, if it involves any 'bundled' investments then it could be considered a Passive Foreign Investment Company (PFIC) by the IRS, which means considerable complications with American tax authorities for people who invest in one.

The same is true of Assurance Vie, another popular French savings vehicle.

• 'Death by a thousand cuts' - Assurance Vie tax warning for Americans
• What Americans in France need to know about investments and pensions

Americans should also look into how the IRS would classify the plan. If US authorities do not see it as a French pension (which normally would only be taxed in France), then you could end up paying yearly taxes on it. This is often the case with products where you can take the cash out after five years. 

For everyone else - keep in mind that the PER is intended as a long-term savings plan and locks in your money, meaning it's probably not suitable for people who don't intend to be in France for long.

Otherwise, there are no restrictions on foreigners opening them, provided you are legally resident in France - so they're not suitable for second-home owners and other non-residents.

What is a Plan d'épargne retraite?

There are two types of Plan d'épargne retraite - PER d'enterprise and PER individuel. The first is offered through businesses to employees, it's essentially a perk for employees and not all companies offer them - they're more common if you're working for a big company.

The second is an individual plan that you set up yourself.

In both cases they act in a similar way to a private pension fund - you put money in regularly, the fund holder invests the money on your behalf over a long or medium period and then you can start to draw the money when you retire (either as a lump sum or as income). The funds are locked, so you cannot take out money as and when you need it, like a savings account. 

There are, however, certain circumstances in which you can withdraw the money before retirement.

How do I set one up?

Although the scheme has the backing of the French government, PERs are not actually run by the government, instead they are private financial products run by financial service companies - most high street French banks offer them to their customers.

You can shop around for terms and conditions and rates, but for most people the easiest option will be setting one up through their bank.

Your adviser can talk you through how they work and set one up according to your specifications - for example whether you want to go for high or low risk investments, how long you anticipate the fund running for and whether you want to prioritise ethical investments.

It's up to you how much you want to put into the account and you can either set up a regular direct debit or put in lump sum amounts as and when you want to. There is no required minimum amount per year, so you can have a year when you put nothing into the PER if it's been a tough year financially.

Accessing the money 

Because PERs are run by banks and other financial firms the exact terms and conditions vary and it's vital to read through them carefully. However in most cases the money will be locked until you retire.

There are, however, some circumstances in which you can access your savings;

• To buy a main residence - most people use the PER to save for retirement, but you can also use it to save up to buy a house. In this case, the house you are buying must be a main residence, not a second home
• If you lose your job - if you become unemployed and are on French chômage (unemployment benefits) then you can access the finds. You will need proof of your registration with the Pôle Emploi/France Travail
• If you fall ill - if you cannot work due to ill health you can also access the money. You will need proof that you are unable to work, such as sickness benefits or a medical certificate
• If you leave France - this is an important one for foreigners. If you're setting up a PER you probably plan to remain in France for the long term, but plans change and no-one can predict the future. The PER is only available to French residents, so if you leave the country permanently you will not be able to keep it, but you can access your money
• Other 'major events' - there is a force majeure clause that allows you to access your money in certain other circumstances. To qualify as a force majeuere the events usually need to be serious and outside your control.

So how is the government involved?

The products themselves are offered through private companies, but the French government is keen to encourage people to save and changed the law in 2019 to create the new format PERs. The state also regulates how the accounts are managed and what information your bank must provide you with about your investment.

But the biggest state contribution concerns taxes, as money that you put into a PER can be deducted from your taxable income for that year - this is usually within a minimum of €4,399 and a maximum of €37,094 per year, depending on your personal circumstances. Find full details on the tax situation here.

What about children?

The PER is intended for adults, but there are plans to introduce a new savings option for under-21s, called the Plan épargne avenir climat.

This is a savings account set up by relatives for children, with the money invested in green-related investments. It will be available in the first half of 2024.