Launched two years ago, the retirement savings plan is a success. Economy and Finance Minister Bruno Le Maire is delighted, but regrets that fees are too high, and would like to take steps to reduce them.
A resounding success for the retirement savings plan
The Retirement Savings Plan (PER) came into being two years ago, on October 1, 2019, and replaced previous retirement products such as the Popular Retirement Savings Plan (PERP) and the Madelin contract. This new scheme was introduced as part of the Pacte law, and aims to enable long-term savings for a more comfortable retirement.
Individuals can subscribe to a retirement savings plan, but companies can also set one up for their employees. In this case, it's a collective company retirement savings plan, or a compulsory company retirement savings plan, both of which replace the collective retirement savings plan (PERCO) and the Article 83 contract.
When it launched the PER, the French Ministry of the Economy and Finance set itself a target of 3 million contracts subscribed by early 2022. This target has been met and even exceeded ahead of schedule, with 3.8 million savers already holding a PER to date. The 4 million mark should be passed early next year, with more than €50 billion in assets under management.
Excessive fees and a lack of transparency
However, while Bruno Le Maire, the French Minister of the Economy and Finance, is delighted with this success, he regrets that the fees are too high, and has announced his intention to " take the necessary measures to ensure that these fees are reduced ".
In July 2021, a report by Corinne Dromer, President of the Comité Consultatif du Secteur Financier (CCSF), noted " numerous fees whose accumulation weighs on returns ". Based on an analysis of 34 contracts, the CCSF found that the " average maximum displayed fees on deposits [...] was 3.18% ".
These fees vary enormously, from 0% for online brokers to 5%. Insurers and asset managers are at the high end, with an average rate of 4.79% for the former, and 4.51% for the latter.
In addition to these entry fees, there are other charges, such as management fees on unit-linked products, management fees on the euro fund and proportional arbitration fees. For greater transparency, the report recommended that the various players disclose total management fees as a percentage of assets, before and after subscribing to a retirement savings plan.
This information could appear in an additional column, and be communicated upstream, on distributors' websites in particular, with an annual update for investors.
Bruno Le Maire considers this recommendation to be pertinent, while making it clear that he does not intend to be " content with transparency ", which he believes should lead to " a reduction in fees ". While the time has not yet come for a binding regulatory text for insurers, a market agreement is planned for early 2022.
On the other hand, the suggestion of a public comparator mentioned in Corinne Dromer's report did not convince the Ministry of the Economy and Finance, citing the difficulties of updating this type of tool.