To meet the need of every individual for an additional plan to their mandatory pension fund (basic pension and pension plan), insurance companies offer retirement savings policies that can be purchased individually or under their business activity.
Available to anyone to top up their pension savings mostly in the form of a life annuity, Perp is a long-term savings product. The annuity is payable from the claim of the mandatory pension settlement at the age of 62.
The Perp also helps set up a savings plan to be paid in the form of an amount from retiring or at the age of retirement intended to be used for your primary home (home ownership or if you have not owned a property in the two years prior to your retirement).
The law also provides the ability to have a capital of up to 20% savings as well as a life annuity in addition to the pension.
Two policies for the self-employed: Madelin pension fund Madelin pension plan
Madelin pension funds help self-employed persons (SE) to build up a supplementary pension, by joining a group pension plan
Contributions made under this plan may be offset from the taxable income up to the tax limit.
The supplementary pension is paid in the form of a life annuity (life income).
Plans tailored to certain categories of employees
Insurance companies also offer individual pension plans to civil servants, hospital staff, local politicians…
Companies may purchase pension insurance for the benefit of the whole or part of their employees, allowing them to receive additional income on retiring. These Plans guarantee the payment of a lifelong pension to the employee (or up the death of his/her spouse, for widower’s pension).
The business retirement savings Plan is a group life insurance policy purchased by the company and available to all employees or to a specific category of employees (e.g. executives, non-executives), at the company’s discretion. This is a mandatory plan for the relevant employees
This plan is a “set-contribution” plan as the contribution rate (for example, a percentage of the salary) is determined at the time of purchase and shall no longer vary afterwards. It is also known as the “section 83” plan, in reference to article 83 of the General Tax Code laying down its taxation.
Based on the plans, the payment of contributions may either be fully borne by the company or shared between the company and the employee. Optional additional payments may also be made by the employee.
These plans provide tax and social incentives both for the relevant employees and companies.
The amounts paid into the account of the Insured shall not be available before they retire (except for cases of early release linked related to certain personal events).
At maturity, the employees, whether or not present within the company at the time of retirement, will receive this additional pension.
The amount of the pension is not set at the time of purchase of the plan.
Pension funds with set benefits (“section 39”)
The Pension funds with set benefits is a group life insurance policy purchased by the company. It may be intended for a specific category of employees only. In this case, all employees of the company shall have at least a Perco (A Group Retirement Savings Plan) or a PER business (“section 83”).
This plan is known as “set benefits” because the level of the pension paid during retirement is determined at the time of purchase. It is also known as ‘Section 39’ Plan, in reference to Section 39 of the General tax Code defining its taxation.
Contributions are paid in full by the company.
These plans provide tax and social incentives both for the relevant employees and companies.
Only the employees in the company at the time of their retirement may receive this pension supplement. The amount of the pension may be equal to a percentage of the final salary (additional plan) or calculated in such a way that all retirement pensions (existing mandatory retirement or other plans funded within the company) received by the employee reaches a percentage of the final salary (differential plan).
Plans offered by insurance companies are managed by capitalisation: the insurer invest a portion of the premiums collected and then reinvests financial revenues obtained so as to increase the initial amount.
This way, the insurer builds up a capital to be used at the appropriate time, benefit (pension annuity or capital) provided in the Insurance policy
