PER or life insurance, which investment to choose? Are you making the right choice?

It can be difficult to choose between PER and life insurance. As a reminder, these are two key positions for the French. Note that PER has already exceeded 3 million insured holders by the end of March 2022. For its part, life insurance retains its preferred investment security for the French with 14.3 billion euros in contributions paid in the 1st quarter of 2022. To help you choose between these two savings solutions, here are the essential points to remember!

A quick reminder about the benefits of life insurance

Life insurance figures are always impressive. In 2021, for example, the outstanding amount exceeded 1,860 billion euros (payments, annual interest and unrealized capital gains). The three main strengths of life insurance are flexibility, taxation and returns.

Note that the euro-denominated life insurance fund delivered a return of +1.30% in 2021 (source: France Assureurs). Ditto for the financial year 2020. Unit-linked (UA) naturally gives higher returns (approx. 3% in 2021).

For the flexible side of life insurance, we are talking in particular about the possibility of choosing a capital outflow or an annuity outflow at any time. The contract holder can also make scheduled partial redemptions.

The taxation of capital gains realized within the framework of a life insurance policy remains one of its strengths. Explanations, capital gains on payments made up to 26/09/2017 are subject to the progressive scale of income tax. There is another alternative where capital gains are charged at a rate of 35% for membership of less than 4 years or 15% for more than 4 years and 7.5% for more than 8 years.

Things are slightly different for capital gains on payments made from 27/09/2017. They are subject to a rate of 12.8% for membership of less than 8 years, 7.5% for more than 8 years. In all cases, the total amount of payments dated 31 December of year N-1 on all contracts must be less than €150,000 (or €300,000 for a married couple or PACS couple). Beyond that, the rate is 12.8%. Of course, the saver can still choose the progressive scale of income tax.

Focus on the benefits of PER

The pension savings plan brings together benefits that are almost comparable to those of life insurance. In particular, there is taxation. It is particularly advantageous, as the winnings are tax-free for the duration of the contract.

  • Voluntary contributions are 100% deductible from taxable income.

As part of a PER, the tax credit must remain below the social security cap (PASS) from the previous year. It cannot exceed 10% of the income from the previous year within the limit of 8 times PASS for the previous year. It is quite possible to withdraw up to €4,113 (minimum) from voluntary payments or €32,908 (maximum) from income received in 2022 (must be declared in 2023).

Good to know : the deduction ceiling is more interesting for non-salaried employees (TNS), i.e. 10% of the PASS for the payment year or 10% of the taxable profit for the payment year limited to 8 times the PASS for the year of the payment payment, with an increase of 15% of the fraction between 1 and 8 PASS in the payment year (up to €76,101 deduction in 2022) .

Leave a Comment