Employee savings: please note that the employee savings plan cannot be released in several instalments on retirement

The facts

Mrs A told me that she had an employee savings plan with establishment B.

She told me that she had been retired since July 2022 and had therefore requested the partial release of her employee savings.

Following this initial release, Mrs A made a second request for release on the same grounds two months later.

However, establishment B refused this request on the grounds that a request had already been made.

Mrs A challenged this refusal, pointing out that she wasn’t informed of the need to release all sums invested at the time of her first request.

In her application, Mrs A told me that she requested the release of funds for some of the monies in her company savings plan on the grounds of termination of the employment contract, believing that several consecutive releases would be granted for the same reason.

In these circumstances, Mrs A asked me to take action against institution B to secure the total release of her savings, as the account holder’s website allowed her to easily access documentation that could help her.

The investigation

I questioned the account keeper, who confirmed that a request to unlock part of the savings in Mrs A’s employee savings plan was made in June on the grounds of “termination of employment contract”, following her retirement.

Establishment B therefore repaid the sums requested.

In addition, the bank told me that its documentation about cases where an employee savings plan is released early (available from the investor area) clearly states that if funds are partially released, the rights not reinstated remain unavailable until the expiry date of the unavailability period – generally five years – which I was able to ascertain from the information provided by the account keeper.

For these reasons, the account keeper informed me that he was refusing to comply with Mrs A’s request.

Recommendation

Having carefully examined the aspects of this case, I personally first noted that the request to release employee savings was based on the termination of the saver’s employment contract, following her retirement.

In such a case, the saver can indeed request the full or partial early release of the sums invested in their employee savings plan. However, they can only make a single request to release funds on these grounds.

In fact, as the regulations state in the Guide to employee savings schemes published by the French Ministry of Labour, "for a given operative event, the early termination of the unavailability period takes the form of a single payment.  This means that the same operative event cannot give rise to successive releases". This means that in the event of a partial release, the saver will not be able to make an additional request.

On the other hand, when it comes to assets invested in their PERCO (or PERCOL, the new employee retirement savings plan introduced by the French PACTE Law), an employee can apply to release them in the form of successive partial repayments following retirement.

This difference can be explained by the fact that for the PERCO, retirement is the natural end point when the assets become available, so this is not a case of early release. Conversely, termination of the employment contract constitutes grounds for early release of assets still unavailable in the employee savings plan.

As a result, I told Mrs A that I had no way of responding favourably to her request to release the remaining assets in her employee savings plan.

The lesson to be learned

This report explains the difference between an employee savings plan and a retirement savings plan (PERCO or PERCOL).

The aim of a retirement savings plan is to enable investors to build up savings for their retirement. Retirement is therefore the natural end point for this type of plan.

As a result, when an employee retires, all assets become payable and can be claimed by the saver in the form of a lump sum or an annuity, in several instalments.

The employee savings plan is an employee savings scheme. The sums invested in this plan therefore become unavailable for a period of five years from the date of investment. However, the sums can be repaid early on certain grounds, such as termination of the employment contract. However, under the single payment rule, funds can be released early on the same grounds on one occasion only[1]. 

Savers should therefore be aware of this rule when they make their request for early release, and that if they do not request full release, the remaining sums cannot be released for the same reason.

It should be noted that it is also possible for retired employees to continue to make payments into their employee savings plan[2] (which are then frozen for five years), which is not the case when an employee leaves the company for a reason other than retirement[3].

Similarly, a retired employee can continue to pay into their PERCO or PERCOL. This option is also available to former employees whose new employer does not offer a retirement savings plan[4].

^[1] Except for assets not yet identified the date of the operative event, for which further savings may be released. Monthly report on the subject

^[2] Article L. 3332-2 of the French Labour Code: "Former employees who have left the company on retirement or early retirement may continue to make payments into the company savings plan."

^[3] See previous monthly report Employee savings: even in the event of retirement, the liquidation of assets does not result in the closure of the employee savings plan

 ^[4] Article L. 3334-7 of the French Labour Code and L. 224-17 of the Monetary and Financial Code