Employee Savings Schemes
Employee savings schemes are a tool in corporate wages and social policy. It covers several systems whose objective is to associate employees with the results of the company and to encourage the development of collective retirement savings solutions.
The establishment of one or more employee savings plans also meets the need for companies to retain talents and be more attractive to new recruits. Company owners can also benefit from Employee savings schemes.
The PACTE law adopted in 2019 revitalizes employee savings plans in order to make them more attractive for businesses and employees, and thus increase the number of beneficiaries in SMEs.
The new tax and social benefits surrounding incentive schemes, participation, group retirement savings plans, and PEEs now make these different vehicles more readable and interesting.
To make the system more attractive to employees, the company may decide to set up a contribution. It allows the company to add funds to the sums paid in by employees. The company’s contribution is often 100%, which is as much as the payment made by the employee. Though, the rate of contribution can vary between 0% and 300%, depending on the agreements and within the limits provided by the ceilings.
Since January 2019, companies that employ less than 50 employees are exempt from the 20% social charges for the implementation of a voluntary participation agreement. The same goes for profit-sharing agreements for companies with fewer than 250 employees. This measure alone makes voluntary profit-sharing agreements much more advantageous for SMEs.
Profit-sharing agreement specific changes (under certain conditions)
- Increase in the individual ceiling for amounts distributed
- Possibility of distributing undistributed sums immediately
- Possibility of integrating a multi-year objective into the calculation of the profit-sharing
Participation agreement specific change
- The sums distributed globally cannot exceed 3 times the annual Social Security ceiling (PASS)
Pension savings schemes
As of October 1, 2019, three new savings products will be available. Two relate to corporate retirement savings: the group PER which will replace the PERCO and the PER Cat in place of the “Article 83” contracts. On an individual level, an individual PER (PERin) is created which can accommodate the current PERP or Madelin retirement contracts.
The fundamental points of the reform relate to:
- The portability of the assets saved on all types of contracts
- The possibility of to use the capital in one or more installments (annuities)
- Savings may be released in advance, particularly in the case of a main residence acquisition
All the modifications and new devices are detailed below:
Various employee savings plans
The profit-sharing agreement is optional, it is granted by the company to its employees. The amount of the premiums and the conditions to be reached for their payment are detailed in the agreement.
The system benefits from a favorable tax and social framework for the company and the employees.
Participation agreement aims to redistribute a portion of the company profits with its employees. It is mandatory for companies whose workforce is at least 50 employees over the past 5 years. It can also be set up voluntarily by companies that do not meet this threshold.
Formerly known as PERCO, the Collective Retirement Savings Plan (PER Collectif) is a flexible employee savings plan that can be fed from various sources (participation, profit-sharing, voluntary payment).
In addition, the company and the employees benefit from advantageous tax and social conditions.
The company savings plan (PEE) is a collective savings plan set up voluntarily by the company, whereby the funds are locked-in for a period of 5 years. It allows all beneficiaries to develop savings invested in financial securities: stocks, bonds, SICAV, FCP, etc. The scheme benefits from advantageous tax and social conditions.
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