- Contributions are deductible from your taxable income, within limits
- Especially valuable if your marginal tax rate is high (30% or more)
- You can exit as a lump sum or as an annuity at retirement
- A genuine tax-arbitrage tool if your rate falls in retirement
- Funds are locked until retirement, save for rare early-release cases
- The upfront tax break can be undone by tax on exit
- Bank PERs often charge high fees (1 to 1.5% a year)
- Little benefit if your tax rate is low, or unchanged in retirement
The Plan d'Épargne Retraite (PER), created in 2019, is said to be one of the French public's favourite savings schemes. It is also — and this is rarely said out loud — a particularly attractive product for the banks. To understand why, you have to look at who really benefits from each of its features.
The four main features of the PER
(1) An upfront tax deduction. Contributions to a PER are deductible from your taxable income, within the limit of 10% of the previous year's professional income (subject to a floor and a ceiling). This is the headline selling point.
(2) Exit as capital or as an annuity. At retirement there are, in fact, three options: a lump-sum withdrawal in one go, or a capital withdrawal spread over several payments of your choosing — both referred to as sortie en capital in French — or conversion into a life annuity (rente in French). Choosing the annuity is irreversible: the capital is given up for good and cannot be recovered, only the periodic annuity payments continue, for life.
(3) A capital-gains tax regime. For lump-sum withdrawals: taxation under the flat tax (31.4% — 12.8% income tax plus 18.6% social security levies, since the LFSS 2026 increase), whether or not you took the deduction on the way in. For an annuity: income-tax treatment with an age-based allowance.
(4) Capital locked until retirement. This is the central point. Funds placed in a PER are unavailable until you retire, save for rare early-release cases — the most common being the purchase of your primary residence (résidence principale: the home you actually live in for most of the year and that is your tax home), alongside events such as a serious life accident.
Why the PER is especially attractive… for the banks
The tax deduction (1) and the capital-gains treatment (3) are neutral for the financial institutions — they apply to the investor, not to them. Exit as an annuity or capital (2) is likewise not where their interest lies. The feature that genuinely benefits the banks is the lock-in (4).
The PER is still young (2019), but it is reasonable to think that this lock-in until retirement age makes it a uniquely stable, long-duration source of assets under management. An employee who opens a PER at 22 potentially locks their money away for 40 to 45 years. And across regulated schemes, banks and insurers tend to steer savers toward "managed" (piloted) allocations that carry higher fees.
The maths is worth spelling out: 1% in annual fees over 40 years, on a capital of €100,000, represents a loss of roughly €33,000 compared with a zero-fee product, assuming a 5% annual return. Over such long horizons, fees are not a detail — they are the deciding factor.
PER individuel or PER obligatoire d'entreprise?
Everything discussed below concerns the PER individuel (PERin) — the version you choose to open and fund yourself, which is why the arbitrage matters. Some employers instead set up a PER obligatoire d'entreprise (formerly known as "Article 83") for specific categories of staff: contributions there are compulsory and typically funded wholly or partly by the employer, as part of your overall pay package. You have no choice to make in that case, so there is nothing to arbitrate — the sensible view is simply to accept it as extra money on top of your salary, rather than weigh it against a PEA or assurance-vie. Read more in our dedicated article on the mandatory employer PER.
So, is the PER right for you?
The answer depends chiefly on your marginal tax rate (TMI) today versus the one you expect in retirement.
If you are in the 41% or 45% bracket today and expect a more modest retirement (an 11% or 30% bracket), the tax arbitrage clearly favours the PER: you deduct at a high rate now and are taxed at a lower rate later. If you are in the 11% or 30% bracket and your standard of living in retirement will be comparable to today's, the benefit is far less obvious — sometimes nil. In that case, a PEA or assurance-vie, which keep your money accessible, is often the wiser choice.
One point is often overlooked: a capital withdrawal from a PER is added to your reference taxable income (revenu fiscal de référence) for the year you receive it — the figure used to set your tax bracket and your eligibility for various allowances. A large withdrawal, especially if taken as a single lump sum, can therefore push you into a higher bracket than the one you would otherwise be in during retirement. For example: your reference taxable income is €50,000 (TMI 30%). Over 10 years you paid €5,000 a year into a PER, i.e. €50,000 in total. At retirement your income falls to €40,000 — but if you withdraw the full €50,000 in one go, your reference taxable income for that year rises to €90,000, with part of it now taxed at 41%. Spreading the withdrawal over several years avoids this effect.
Before paying anything into a PER, always simulate your tax position on exit. The upfront advantage can be largely cancelled out by taxation in retirement, especially if your income stays high. And compare the fees: a PER at 0.5% a year is not remotely the same as one at 1.5% over 30 years. Low-cost online contracts exist and are worth comparing against the bank products.
Independent advice, no commissions
This article is educational, not a personal recommendation. As a fee-only adviser, paro conseil analyses your situation and helps you choose the right tools — PER, assurance-vie, PEA — with complete independence. Get in touch to discuss your retirement strategy.
In summary
The PER is a genuine tax-arbitrage tool — but only for the right profile. It works best for high earners (41–45% bracket) who expect a lower rate in retirement, have a long horizon, and can afford to lock money away. For everyone else, the upfront deduction can be undone by exit taxation and eroded by high fees. Simulate your exit tax, compare fees closely, and treat the PER as one option among several rather than a default.
Frequently asked questions
What are the advantages of the PER?
Mainly the upfront deduction of contributions from taxable income (within 10% of professional income or the annual social-security ceiling), which is especially valuable at a high marginal tax rate, plus the flexibility to exit as capital or an annuity.
What are the drawbacks of the PER?
Three main limits: exit taxation can be heavy if you were in a high bracket on the way in and a low one on the way out, reducing the real gain; fees on bank PERs are often high (1 to 1.5% a year); and the capital is locked until retirement bar exceptional cases.
PER or assurance-vie: which to choose?
The PER is advantageous if your current marginal rate is 30% or 41% and you expect a lower rate in retirement (the difference is your net saving). Assurance-vie offers more flexibility — your money stays accessible — which suits those whose tax rate will not fall.
Why is the lock-in the banks' real advantage?
Because it turns your savings into a very long-duration, stable pool of assets under management. Combined with higher-fee "managed" allocations, small annual charges compound into large sums over decades.