An oddity of the Collective Company Retirement Savings Plan: is early release for the restoration of a main residence following a natural disaster permitted?

Facts

Ms D stated that had held a PERCO, which was converted into a Collective Company PER (PERCOL, also known as a PERECO)^[1] by her employer with the agreement of the trade unions and in accordance with the provisions of the PACTE Law of 22 May 2019.

Like all the firm's employees, all her assets were transferred from her PERCO to her PERCOL.

Ms D asserted that she had suffered damage to her main residence as a result of a period of drought, a natural disaster recognised by ministerial decree, which she had sent to institution X, with which her PERCOL had been opened.

However, institution X did not satisfy her request on the grounds that only assets held in a PERCO are eligible for such a release, but not those held in a PERCOL.

As a result, Ms D submitted a complain to reiterate her request for the funds to be released. However, institution X upheld its refusal.

Disturbed by the situation, Ms D felt that, in addition to the psychological impact, she was suffering financial prejudice of around €13,000, corresponding to the amount of the release requested, and asked me to intervene.

Investigation

I contacted institution X, which confirmed that Ms D had indeed submitted a request for early redemption on the grounds of "restoration of the main residence" by email.

It stated that it had processed the release on this ground on the same day and paid out the net sum of €1,530 corresponding to her assets held in her PEE (employee savings plan).

On the other hand, as it had been explained to Ms D, the account keeper told me that it had not been in a position to release the sums invested in her PERCOL because, under the regulations, the ground stated did not allow her to redeem her PERCOL assets early.

On receiving this reply, I carefully examined the case and the applicable regulations.

I noted that since the PACTE Law of 22 May 2019, the Employee Retirement Savings Plan (PERCO) can be converted into a Collective Company Retirement Savings Plan (PERECO or PERCOL).

In the case in question, it was clear from the information in the file that Ms D's employer had exercised this option by signing an amendment to the collective agreement relating to the PERCO concluded with the staff representative bodies, which was enforceable against her in her capacity as an employee.

I also noted that it is quite true that the restoration of the main residence following a natural disaster, recognised by ministerial decree, constitutes grounds for early release of a PERCO^[2], but not of a PERCOL.

Therefore, in law, I could not criticise Ms D's account keeper for refusing to release her PERCOL assets on this ground.

However, unlike a judge, the Ombudsman has the power to make proposals on a purely equitable basis when the strict application of the law seems to lead to a particularly unfair situation.

In this particular instance, the exceptional circumstances of the case seemed to me to fall into this category.

While the ground for release in question remains possible for the PERCO scheme, this has not been the case for the PERCOL scheme since the PACTE Law. In my opinion, this wording seems to run counter to what the public authorities wanted for retirement savings (with the exception of the acquisition of the main residence), retaining only imposed situations and not those at the initiative of the employee.

In my view, this situation – which was clearly imposed rather than chosen - which places savers in both financial and psychological distress, should allow the PERCOL scheme to be released in this way.

As a result, I contacted the Directorate General for Labour (DGT), which told me that it supported my analysis and, pending a change to this text that it would also like to see, recommended, on an equitable basis, authorising early release on this specific ground.

On the strength of this response, I asked institution X to reconsider its position on an equitable basis, in other words, to accept a more balanced solution in the light of the specific circumstances of this case.

Institution X informed me that its processing department had proceeded on a equitable basis to the early release of Ms D's PERCOL on the grounds of "Restoration of the main residence".

Lesson to be learned 

At a time when natural disasters such as fires, floods and storms are becoming every more frequent worldwide, the economic and material impact of these phenomena is considerable and gives rise to major reconstruction needs.

In the light of these factors, the "restoration of the main residence following a natural disaster" ground for early release, provided for since the creation of the PERCO in 2003, is therefore important for many employees who are increasingly exposed to these risks and face major works following the destruction or deterioration of their home.

In my capacity as ombudsman, I am therefore calling for a change in the texts, also recommended by the DGT, which would give employees the right to release funds from their collective company PER in this scenario and, pending this change, exceptional release on an equitable basis would enable employees who hold such a plan to cope with the material and financial consequences of a natural disaster.