Is the PER (retirement savings plan) really worth it?

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 a lump sum or an annuity. At retirement, you can take your savings as capital (all at once or gradually) or convert them into a life annuity.

(3) A capital-gains tax regime. For lump-sum withdrawals: taxation under the flat tax (30%), 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 (buying a main home, 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.

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.

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.

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.

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