The Pacte Law’s goals are to finance the French economy more effectively, do a better job of ensuring that employees share in the benefits of growth, and encourage French people to save and invest, particularly with a view to supplementing their pensions.
The new legislation will have major implications for retirement savings and is expected to:
- Promote retirement savings within small businesses by scrapping the forfait social (a contribution paid by employers and levied on compensation or gains that are not subject to social security charges and contributions) for incentive plans at companies with fewer than 250 employees and for profit sharing plans at companies with fewer than 50 employees.
- Promote employee share ownership by relaxing the procedures used by simplified joint-stock companies to offer shares to their own employees, by allowing employers to contribute unilaterally to employee share ownership funds and by halving the forfait social for employer contributions to such funds.
- Make retirement savings more appealing by allowing people to take their savings with them when they change employer and by harmonising investment vehicles (Article 83, PERP, Madelin, Perco), including in terms of tax treatment for payments.
- Relax exit requirements at retirement: the requirement to take out an annuity will be restricted to products subject to mandatory payments, early withdrawals will be possible, notably to buy a primary residence, and all annuity policies will include the option of paying survivor benefits to a spouse.
- Encourage life-cycle strategies, which are to become the default option for all supplementary retirement saving schemes. This will give people an incentive to put their money in riskier and thus potentially higher-earning investment products invested in the real economy…