When you arrived at your company, you may have been lucky enough to receive a brochure presenting your brand new employee savings plan (let’s be honest, you probably haven’t read it) .
Or maybe you didn’t even really know you had one, until you were asked if you’d rather put your profit-sharing bonus on it or cash it in directly.
And in fact, employee savings is a product that is generally not well known.
Yet, when used correctly, these savings options can sometimes actually pay off in the long run. But they also have their share of disadvantages, which it is important to know…
To accompany you, here is our guide on employee savings , with a simple objective: to tell you everything about this scheme, and whether or not you should invest your money in it.
Employee savings, what is it?
In particular, it allows employees to invest their premiums in order to increase their savings while benefiting from very attractive tax advantages.
Your savings are then built up mainly thanks to the payment of your profit-sharing and profit-sharing bonuses and / or by voluntary payments .
More generally, there are 3 main components of employee savings, which we will detail just after in the article:
- Participation and incentive bonuses
- Employee savings plans (PEE, PEI, PER)
- The purchase of shares or the allocation of free shares to employees
Participation and profit-sharing
Your company may have set up a profit-sharing or profit-sharing scheme .
Thanks to the employee savings system, it can then pay its employees:
- A bonus linked to the company’s performance ( profit-sharing ). It is completely optional.
- or a bonus corresponding to a share of its profits ( the participation ). Participation is compulsory from 50 employees (even if it is possible to voluntarily set up one with fewer employees).
The amount of each of these premiums can be distributed:
- Uniformly among all employees
- In proportion to your salary or your time of presence
- or a combination of several of these criteria
Everything will depend on your company and the agreements in place : do not hesitate to inquire directly with your employer for more information.
Bonus payments & employee savings options
When paying the profit-sharing or profit-sharing bonus, you can, according to your preferences:
- Request a direct payment , total or partial: that is to say that you ask to collect the sums and recover them on your personal bank account. If you request direct payment, these sums will then be subject to income tax .
- Request the deposit of these sums in an employee savings plan. The blocked sums are then exempt from income tax.
And that’s the whole advantage of corporate savings: by deciding to invest money in a PEE, a PEI or a PER, you are then exempt from income tax. A significant advantage which it can be interesting to take advantage of except in the event of a financial emergency .
But by placing the sums in your employee savings, these will then be blocked :
- For 5 years on a PEE
- Until retirement for a PER
The incentive bonus is systematically made immediately available, but you can, if you wish, choose to place it in an employee savings plan.
It is the opposite for the participation: if you wish the immediate payment of the sums, you will have to make the request, otherwise, they will be placed on an employee savings plan and made unavailable (except in the event of early release ).
The different employee savings plans (PEE, PEI, PER)
The 3 main employee savings schemes are as follows:
- The company savings plan (PEE)
- The inter-company savings plan (PEI)
- and the retirement savings plan (PER) – and former Perco
The PEE: Company Savings Plan
This is the most widely used form of employee savings in France. The company savings plan (or PEE) is a savings system that allows employees to build up a portfolio of shares, bonds or currencies.
If this system has been implemented in your company, it is then available to all employees , apart from a minimum of 3 months’ seniority which may be required.
Payments into your PEE are optional, but in any case, you can decide to place your profit-sharing and/or profit-sharing bonuses there , amounts from other employee savings plans (excluding Perco), amounts from a time savings account or voluntary deposits from your personal savings .
On the other hand, it is necessary to have that the voluntary payments that you make are capped : you will not be able to invest more than 25% of your gross annual remuneration.
Blocking of sums
The amounts invested in your PEE will be blocked for at least 5 years . On the other hand, certain situations may justify an early release. These include, among others:
- Marriage or Pacs
- Divorce or separation with custody of at least 1 child
- Birth (or adoption) of a 3rd child
- Acquisition, construction, restoration or extension of a principal residence
- Disability or death (you or your spouse)
- Termination of the employment contract
- Creation or takeover of a business
- Situation of over-indebtedness
In most of these situations, you will have to make your request for early release within 6 months of the event, excluding death, disability, over-indebtedness or termination of the employment contract. In these cases, the request can be made at any time.
Beyond the 5-year blocking period, you can obviously keep your savings. The advantage is that you can continue to benefit from its attractive tax system while being able to release your funds at any time.
Taxation and benefits of employee savings
The sums invested in your PEE (as well as company contributions) are exempt from income tax , which is a considerable advantage of this type of investment.
The income and capital gains generated by your savings plan remain subject to CSG and CRDS and social security contributions.
In some cases (the device being optional), the payments you make into your PEE can be supplemented by contributions from the company : this is called an employer contribution.
In addition to this considerable advantage, the sums resulting from the employer’s contribution are exempt from income tax, as well as exempt from tax on capital gains (apart from the CSG / CRDS and social security contributions).
In any case, the contribution can only be a maximum of three times the amount you paid (i.e. 300%), while remaining capped at €3,178.56 (or €5,721.41 if you invest in shares or investment certificates issued by your company).
Unfortunately, as you can imagine: in France, top-ups remain particularly rare .
The PEI: Intercompany Savings Plan
The company savings plan can also be set up at the level of several companies that do not belong to the same group. This is then called a PEI, or Intercompany Savings Plan .
It is therefore quite simply the creation of a PEE common to several companies.
The difference with the PEE is that the proposed actions do not include those of the companies / employer in question.
The PER: Retirement Savings Plan
The Retirement Savings Plan (PER) is a new retirement savings product which, since 2019, has gradually replaced other retirement savings plans.
There are 3 forms of PER:
- An individual PER (former Perp and Madelin contract)
- Two company PERs : one collective and one mandatory
The collective PER
The collective company PER is a savings plan open to all employees of a company. However, you are not obliged to subscribe to it (unlike the mandatory PER).
It is a long-term savings product that allows you to put money aside during the years you work in order to have a capital or an annuity once you reach retirement age. .
The mandatory company PER is a type of PER that can be offered by a company and for which the employees (or a certain category of them) are obliged to subscribe.