Employee savings: what are the benefits for executives?

Previously reserved for large groups, employee savings schemes are now available to organizations with fewer than 50 employees. While employees are the main beneficiaries, company directors and their spouses or civil-union partners are also eligible.

Employee savings, a benefit for both employee and company

Set up within certain structures,employee savings schemes enable companies to pay their employees a share of their profits or performance. The system is made up of two main types of scheme: those that enable employees to build up savings (profit-sharing, incentive schemes, voluntary payments) and those that serve as a vehicle for these savings (company savings plan or PEE, collective retirement savings plan or PERCO, inter-company plan or PEI).

The benefits of employee savings schemes are twofold. On the one hand, employees can use them to increase their income or build up savings for the medium or long term. These schemes provide tax-free additional remuneration, and may give rise to a tax-exempt top-up payment by the employer. In return, the premiums paid are frozen for 5 years (in the case of a PEE) or until retirement (in the case of a PERCO or group PERCO). On the other hand, the company can use this system to build employee loyalty by directly associating them with results. The company also benefits fromtax and social security advantages, such as exemption from social security contributions on sums paid to employees.

More flexible implementation conditions

Employee savings schemes are no longer the exclusive preserve of large companies. The French law of August 16, 2022 on urgent measures to protect purchasing power relaxed the conditions for setting up profit-sharing schemes in companies with fewer than 50 employees. The agreement can now be set up on the basis of a unilateral decision by the employer. Generally speaking, employee savings schemes are set up by agreement between the employer and the workforce: collective agreement, agreement within the CSE, agreement by ratification by 2/3 of the workforce, etc.

This announcement is good news for company directors, as well as their spouses, PACS partners, associates or employees, who may decide to pay their profit-sharing and incentive bonuses into an employee savings plan.

Companies subject tocorporate income tax benefit from income tax exemption under the same conditions as employees when paying into an employee savings plan. Sole proprietors and self-employed managers benefit from an additional advantage: their profit-sharing bonus is tax-exempt, whether or not it is paid into an employee savings plan.

Payments are capped at 30,852 euros for profit-sharing and incentive schemes, 3,290 euros for the PEE and 6,581 euros for the PERCO.