Country Profiles

France

Country Profiles

France

Complementary pensions (Voluntary)

Updated: 31 December 2017
Sources of state regulations concerning voluntary pension plans for private sector employees:

Labour Code and Social Security Code (supplementary social protection part); provides for establishment of plans between employer and employees, regulates protection of employees rights.

Insurance Code, Mutual Insurance Code, Social Security Code (supplementary social protection part),
"Ordonnance" n° 2006/344 on supplementary professional pensions, Monetary and Financial Code, General Regulation of the Autorité des Marchés Financiers (Book IV, Collective investment products); define technical, prudential, investment and contract rules.

Monetary and Financial Code; covers licensing and supervising.

General Tax Code, Social Security Code; regulates tax and social treatments.

Plan sponsors

For private sector, employers (singly or as a group or with employee representatives at undertaking level or employer and employee representatives at industry level) may establish an occupational pension plan in addition to mandatory pension schemes (public basic scheme and private compulsory pay-as-you-go schemes, ARRCO and AGIRC).

These private occupational plans are defined through a collective agreement, an agreement ratified by the employees or a unilateral decision of the employer. In case of industry-wide collective agreement, the minister in charge of labour and social affairs may declare it to be compulsory for all employers and employees in the industry-wide concerned, on request of employers and employee representatives, in charge for the collective bargaining.

Types of plans

Employers who want to establish occupational pension plans may choose between several options. Within the threshold set up by taxation and social rules, the accumulation of several types of plans is possible.

a) Group insurance plans
may be established on defined contributions or defined benefits basis, for all employees, or for an objectively defined category of employees (or for one); employee contribution is determined on a mandatory or voluntary basis. However, the combination of fiscal and social criteria promotes in France three main types of occupational private plans for employees, commonly named after the articles of the General Tax Code they refer to:

1. One main defined benefit plan for differential or additional supplementary pension are known as "art 39 plan" by reference to article 39, 1.1 of the General Tax Code:
- Defined benefit "Art. 39"plans: compulsory membership for employee of the category/ies covered by the plan, compulsory contributions for employer and, in accordance with the plan, for employees;
- Defined benefit "Art 39." plans with conditional rights: compulsory membership for employee of the category/ies covered by the plan, compulsory contributions for employer, no contributions for employees and conditional or random rights (benefit is paid when and only when the employee is still working in the sponsoring company at the time of retirement). This type of plan is also known as "art 137-11" (in reference to article L137-11 of the Social Security Code on social treatment of employer's contributions).

2. At least two main type of defined contribution plans:
- Defined contribution "Art 83" plans named in reference to the article 83.2 of the General Tax Code (defined contributions plan, with or without guarantees): compulsory membership for employees of the category/ies covered by the plan, compulsory contributions for employer and, according to the plan, for employees.

No specific authorization or registration is required for establishing these types of plans.

- Defined contribution "Madelin" plans: specific plan for professional workers; specific tax treatment (1994 law); subscription is optional, on individual basis; there is a version for agriculture workers (with term-end in annuities).

b) In the field of employees' savings provisions ("Epargne salariale") through collective agreements. Benefits depend on the individual amount of transfers and payments and the financial investments chosen by each employee.

- Plan d'Epargne pour la retraite collective (PERCO): voluntary membership of the sponsoring company. For employees, they propose to allocate on voluntary basis incentives, parts of their wages and, partially, some of their leaves. For employers, voluntary contributions are required, which can be equivalent to the employee contributions.

No specific authorisation is required for establishing PERCO Plans but they have to be registered by labour law inspection.

All plans: Generally, providers are chosen in the frame of the collective bargaining and appointed in the collective agreement and/or plans rules or regulations.

Group insurance Plans: "Art 83" and "Art 39" plans and most of "Art 39" plans with conditional rights are managed by insurance companies regulated by the Insurance Code, or, for non-profit undertakings managed by members, the Mutual Insurance Code or for protection-dedicated entities, by the Social Security Code.

PERCO Plans: Employees' assets are mainly invested in specialized investment funds named Employee investment funds (Fonds communs de placement d'entreprise, FCPE).

Expand
All Plans: The types of plans may cover all categories of private sector employees including agriculture. Each plan defines the category/ies covered.

There are other individual and voluntary occupational plans for self-employed and civil servants in addition to their own public retirement schemes (basic and compulsory complementary schemes). These types of plans are not covered in this profile.

Sources of funds

Employee contributions

Employees' contributions, transfers or payments are under conditions and limits defined by taxation and/or social security contributions rules.

Art 39 DB Plans with conditional rights: N/A

Art 39 DB and Art 83 DC Plans: Depending on plans rules.

Employees' contributions can be compulsory and established on an equal basis (fixed rate or amount for all employees of the company or the category covered). Since 2010, members of Art 83 DC plans may pay voluntary additional contributions to their plans.

PERCO Plans: Voluntary transfers and voluntary additional payments up to a maximum (25 % of the employee annual wage).

Employer contributions

Employers' contributions and payments are under conditions and limits defined by taxation and/or social security contributions rules.

Art 39 DB Plans with conditional rights: Full contributions.

Art 39 DB and 83 DC Plans: Employer must pay, at least, a part of contributions. Employers' contributions are established on an equal basis (fixed rate or amount for the company or the category covered).

PERCO Plans: Voluntary matching payments up to 16 % of social security contribution (6 276,48 € in 2017) and up to three times employee contribution.

Other sources of funds

All plans: None.

Methods of financing

All plans: Funding.

Asset management

Group insurance Plans: Assets are managed by life insurance companies.

PERCO plans: Assets are invested in various Employee investment funds (FCPE). PERCO plans must offer to each employee a choice between at least three different investment options. They are managed by assets management companies.

Acquisition and maintenance of rights

Waiting period

Group insurance Plans: Neither legal minimum waiting periods nor minimum age conditions are required. When existing, they are generally short.

PERCO Plan: Legal maximum waiting periods: three months. Neither legal minimum waiting periods nor age conditions are required.

Vesting rules

Art 39 DB Plans with conditional rights: No vesting rights before retirement. Benefit is only granted if the employee is still active in the sponsoring company at retirement age.

Art 39 DB and 83 DC Plans (and other plans mentioned): No legal minimum or maximum vesting periods required. Vesting rules depend on plan rules. When existing, there are generally short.

PERCO Plan: N/A

Preservation, portability, transferability

Art 39 DB Plans with conditional rights: N/A.

Art 39 DB and 83 DC Plans: Dormant pension rights of outgoing employees are preserved in the plans. For Art 83 DC Plans, on request of the outgoing employee, there is a possibility to transfer the assets representing members' pension rights to the new employer's pension plan.

PERCO Plans: Assets of outgoing employees are preserved. On request of an outgoing employee, there is a possibility to transfer member assets to the PERCO plan of the new employment. If there is no PERCO plan, there a possibility to continue voluntary additional payments to the previous PERCO plan.

Retirement benefits

Benefit qualifying conditions

All Plans: Retirement age and qualifying conditions depend on the plan rules, but generally are in complement of basic compulsory "pay as you go" pensions.

All Plans except Art 39 plans with conditional rights: Legal rules exist for early payment of benefits in case of particular situations such as end of unemployed benefits, insolvency, disability, death of the beneficiary or spouse.

Benefit structure / formula

Group insurance Plans: Benefits must be paid as a pension for reasons of tax and social treatment. Benefit structures and formulas depend of the plan rules. They are not directly linked to basic and compulsory pay-as-you-go schemes.

PERCO Plans: Benefits are paid as an annuity but if the collective agreement organizing the plan provides so, the employee may choose a lump sum. Benefit structures and formulas depend of the plan rules. They are not directly linked to basic and compulsory pay-as-you schemes.

Benefit adjustment

All plans: Depending on the plan rules for defined benefit « Branche 26 » plans (also called L-441 by reference of the Insurance Code article which defines them), there are specific legal frame for benefit adjustment mechanism ; « Branche 26 » contracts are point-based regime with the same tax advantages than for Art. 83.

Survivors

Group insurance Plans: Depending on the plans' rules. Pension usually includes a reversion pension, equal to a percentage of the deceased member actual or projected pension. Discrimination between widows and widowers is prohibited. In case of divorce, survivor pension has to be shared between not remarried ex-spouse and survival spouse, in proportion of the marriage length.

PERCO Plans: Generally, no survivor annuity.

Disability

All Plans: In France, disability and retirement are covered separately. Therefore, private voluntary occupational pension plans do not include disability benefits. (See also "Benefit structure/formula").
Protections of rights

Protection of Assets

Group insurance Plans: Plans assets are separated from the sponsoring company.

PERCO Plans: Plan assets are separated from the sponsoring company. There is a separate management and depositary of assets of Employee investment funds. In addition, the PERCO plan must offer to each member as of their 45th birthday possibilities of more secure management (securitization option), characterized by desensitization of investments (lower rate of shares).

Financial and Technical Requirements / Reporting

All Plans: Providers are under the regulation and the supervision of the competent Authority (ACPR for Insurance Undertakings and Pension Funds; AMF for legal persons administrating the PERCO).

Whistleblowing

All plans: Providers' auditors must inform the competent supervisory authority and must submit all information which may be necessary for its duties. In addition, for PERCO plans, oversights committees composed of employers and employees representatives are also expected to inform the competent authority.

Standards for service providers

All Plans: Insurance companies, Pension Funds, Employee investment funds, Assets management companies, Depositaries and Custody account-keepers are under regulation and supervision of the competent Authority which performs authorization duties.

Fees

All Plans: There are no legal requirements.

Winding up / Merger and acquisition

All Plans: Operations are under the supervision of the competent Authorities.

Bankruptcy: Insolvency Insurance / Compensation Fund

All Plans: A Guarantee Fund can intervene in case of failure of an insurance undertaking (articles L. 423-1 and following of the Insurance Code).

Disclosure of information / Individual action

All Plans: When becoming a member, employees must be informed on the plans' rules. In addition, for PERCO plans, each new employee must receive a saving booklet ("Livret d'épargne salariale") of the plan, its Employee Investments funds and providers.

Members must be informed annually about the situation of the plan and their individual vested rights or accumulated assets. When leaving the sponsoring company for a new employment, employees receive information on their rights and assets and possibilities offered by the plan.

There are no particular legal rules on procedures to settle conflicts between members and their employers or the providers involved in those (Group insurance and PERCO plans).

Other measures

All Plans: None

Taxation of employee contributions

Art 39 DB Plan with conditional rights: N/A.

Art 39 DB Plans: Employee's contributions are exempted from Income tax and social security contributions as they are not included in employee's salary.

Art 83 DC Plans: Employee's contributions are:
- Exempted from Income tax (in a defined threshold, different for compulsory and voluntary contributions).
- Subject to social security contributions, CSG (Generalized Social Contribution, 7.5 %) and CRDS (Contribution for Reimbursing the Social Security Debt, 0.5 %), calculated on a 98,25 % basis.

PERCO Plan:
- Employee's contributions and employers matching payments are subject for them to CSG (7.5 %), CRDS (0.5%) but exempted from Income tax (at a global level).
- Employees' transfers are exempted from Income tax (at a global level) and social tax and contributions.
- Employees' additional voluntary payments are subject to Income tax, social security contributions, CSG and CRDS.

Taxation of employer contributions

Art 39 DB Plan:
- Exempted from employer tax and wage tax and CSG/CRDS.
- Subject to a specific social security contribution (24% on contributions or 32 % on pensions) and an additional contribution under certain conditions.

Art 83 DC Plans: Employer's contributions are:
- Deducted from undertaking net income subject to taxation.
- Exempted from social security contributions (at a global level) but subject to Forfait social contribution (20 % on full contribution). Compulsory contributions are submitted to CSG and CRDS on a 100% basis (CSG payments being partly deductible from undertaking net income).

PERCO Plan: Employer's voluntary matching payments are:
- Deducted from undertaking net income subject to taxation.
- Exempted from Corporation tax (based on global amounts) and partly from Wage tax.
- Exempted from social security contributions (in a defined threshold) but subject to Forfait social contribution (up to 20 % on certain conditions) and to a corporate contribution (8,2% for the Pension reserve fund) when annual employer's payment is over 2300 euros by employee.

Taxation of investment income

PERCO Plan: Full taxation in case of exit through lump sums, partial taxation in case of exit through annuities.

Taxation of benefits

Art 39 DB Plan: Pensions are:
- Subject to income tax, CSG/CRDS and Public Health insurance contribution (1 %).
- Specific taxation at the level of 7% or 14%, depending of concerned parts of the salary; taxed amounts are themselves deductible depending if under 1000 € or over 1000 €.
- Subject to contribution for long term care (0.3%)

Art 83 DC Plans: Pensions are:
- Subject to income tax, depending on term conditions.
- Subject to CSG (6,6 %), CRDS (0,5 %), contribution for long term care (0,3 %) and Public Health insurance contribution (1 %).

PERCO Plan:
For lump sums are allowed, investment incomes are deducted from income tax calculation but subject to social contribution (15,5%).

When annuities are allowed, they are:
- Subject to Income tax (basis of taxation in the Tax Code according to the age of the employee at the time of annuity commutation) and subject to social contribution (15,5%).
- Subject to CSG (6,6%) CRDS (0.5 %), and others contributions (for long term care, 0.3 % and Public Health insurance contribution (1 %)).

1) For Insurance companies and Pension Funds :

Autorité de contrôle prudentiel et de résolution (ACPR)
61, rue Taitbout
75 436 Paris cedex 09
+ (33) 01 49 95 40 00
https://acpr.banque-france.fr/lacpr.html

ACPR ensures the financial stability and the protection of customers of entities under its control.

ACPR is responsible for the authorization of these entities, the permanent monitoring of their financial position and operating conditions to ensure they are able to perform at any time the commitments they made and to respect the rules of protection of their customers. ACPR also cooperates with the competent authorities in other jurisdictions and, in particular within EEA, to ensure supervision of cross-border groups.

ACPR is an independent public body with legal personality, financed by levies on supervised entities.

2) For Employee investment funds and Providers (Assets management funds, depositaries and custody account-keepers):

Autorité des marchés financiers (AMF)
17, place de la Bourse
75082 Paris Cedex 02
+ (33) 01 53 45 62 00
http://www.amf-france.org/

AMF oversees investments in financial instruments and in all other savings and investment vehicles, ensures that investors receive adequate information and maintains orderly financial markets. AMF is responsible for regulation, authorization, supervision and enforcement.

AMF has jurisdiction over corporate finance activities and disclosure, collective investments products, market and infrastructure and service providers. AMF is also actively involved in financial market regulation and supervision at European and international levels.

AMF is an independent public body with legal personality, financed by levies on supervised entities.

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