Employee savings: the pros and cons of merging employee savings plans

Facts

As a former employee of company X, Ms C was the beneficiary of a employee savings plan (PEE) managed, at the time, by account keeper Z. As her new employer, company Y, had also set up an employee savings plan (PEE), Ms C chose to merge her PEEs by merging her old plan into the new one, also opened with account keeper Z.

A few months after the transfer, Ms C applied for the early release of her savings on the grounds of "termination of the employment contract", and requested the redemption of the assets arising from her earlier employment at company X.

Her account keeper declined her request, telling her that it was not possible. Ms C felt she had been poorly informed before the merger and asked me to intervene.

Investigation

I requested information from account keeper Z, who confirmed that, in 2023, Ms C had requested the transfer of the assets held in the PEE from her former employment with company X into the PEE of her new employer, company Y.

The account keeper told me that Ms C had taken this step on her own initiative, using the "portability form" available in her personal area.

It informed me that in September 2024, Ms C had applied to release all the savings in her first PEE in connection with the termination of her employment contract with her former employer, company X, and confirmed that this application had been rejected: as she was now the beneficiary of a single PEE set up by company Y, into which her employee savings had been pooled, Ms C could no longer obtain early release on the grounds of the termination of her previous employment contract.

Recommendation

This response is in line with the law. However, in this instance, I contacted the account keeper again, pointing out that the portability form available on its website, which must be completed by employees wishing to transfer their assets accrued during a previous employment into the plan(s) set up by their new employer, did not mention the consequences attached to such a choice, in particular the one at issue in this dossier, which is nevertheless of great importance to the employee.

I therefore argued that it would be appropriate, on the one hand, to add explicit wording on this point to the form and, on the other hand, to release, on an exceptional basis, the sums corresponding to the assets accrued by Ms C during her employment with company X.

In response, account keeper Z told me that it had decided to change its transfer form, which will now read as follows: "We would like to draw your attention to the fact that by opting to merge plans, you forfeit the right to early release of your assets accrued during your previous employment on the grounds of ‘termination of the employment contract’”. It further decided to reimburse to Ms C the assets that she had transferred into the plan.

Lesson to be learned

In the event of termination of the employment contract, and at any time after leaving the company, even more than six months after the triggering event, employees may release their PEE on the grounds of "termination of the employment contract" or choose to keep it, if they consider that the funds in which their savings are invested are attractive, particularly in terms of returns. I would like to take this opportunity to recall that this ground of termination of the employment contract does not, however, allow pension savings to be released.

An employee may also opt to transfer their savings into another employee savings scheme. This merger allows employees to avoid the account keeping fees that they must now pay as former employees should they choose to keep their plan, whereas these fees were previously paid by their employer.

In this case, however, they forfeit the right to make use of the ground of the termination of their employment contract with their previous employer for the early release of the corresponding assets. This new employee savings scheme, opened on behalf of the new employer is, in fact, unique and independent of the previous scheme.

It should be noted that only sums of money can be transferred, as the Employee Savings Scheme Guide points out (pgs. 289-290): "The transfer cannot include securities, only sums of money: it is therefore necessary for the member to obtain liquidation of the assets, without this liquidation constituting a pay out". Finally, merger does not change the dates on which the savings become available.

It is important that employees are properly informed about these various points before deciding to merge several employee savings plans.

In this respect, as this dossier demonstrates, mediation makes it possible to take advantage of an individual dispute to improve the procedures and documents made available to retail investors by a professional.