Retirement Savings Plans: compulsory contributions cannot be released to purchase a main residence

Facts

Ms H told me that she was the beneficiary of a supplementary pension contract (an ‘Article 83’ pension contract) taken out with an insurance company and set up by her former company, which she had left as a result of redundancy.

She stated that she had found a job with a new company that had set up a PERECO retirement savings plan opened with Institution Y, which was the account keeper of the employee savings scheme.

In 2022, Ms H transferred her Article 83 pension contract to her PERECO.

After signing a preliminary sales agreement in 2024, Ms H submitted a request for the early release of her PERECO on the grounds of ‘purchase of a main residence’.

However, Institution Y refused to grant the full release of her PERECO because compulsory contributions cannot be released for the purchase of a main residence and Ms H had been correctly informed of this.

Challenging this refusal and the reasons given for it, Ms H asked me to intervene so that she could release her savings to purchase her main residence.

Investigation

I contacted Institution Y, which told me that it had listened again to the various calls and consulted the email exchanges between Ms H and its client service department.

However, the department had not found any request for information about release prior to the transfer operation in 2022. It asserted that discussions prior to this operation focused solely on the terms of the transfer.

The institution states that it was only after the preliminary sales agreement had been signed that Ms H contacted client services, asking why the sums from compulsory contributions could not be released early.

In response, Institution Y explained to Ms H that, in accordance with the legislation on employee savings schemes of which the employee is required to be a member, the compartment for compulsory contributions made by the employer and, where applicable, by the employee, cannot be liquidated for the purpose of purchasing a main residence, pursuant to Articles L.244-4 to L. 224-2 of the Monetary and Financial Code.

In view of these factors, Institution Y confirmed to me that it was unable to satisfy Ms H’s request for a full release of her funds.

Recommendation

In this case, Ms H. had transferred an Article 83 contract, which is a supplementary pension contract with compulsory contributions, to her PERECO.

After a careful examination of the applicable regulations, I informed Ms H that, in accordance with Article L.224-4 of the Monetary and Financial Code, sums from compulsory payments made by employees or employers cannot be released early for the purchase of a main residence.

In any event, I stressed that the transfer itself of her Article 83 contract had not negatively affected Ms H’s ability to release her funds early. In fact, the permissible instances of early release are the same (expiry of unemployment insurance rights, disability, over-indebtedness, death of spouse and liquidation proceedings) as those applicable to the PER. This means that while release for the purpose of purchasing a main residence is not possible for compartment 3 of the PERECO, it was also not provided for under her previous plan.

I therefore told Ms H that, although I understood her disappointment, I had no information that would allow me to consider Institution Y’s refusal to grant her request for early release to be unjustified in terms of the rules applicable to compulsory contributions made or transferred to a PER.

Lesson to be learned

The Retirement Savings Plan (PER), introduced by the PACTE Law in 2019, has three categories: the Personal Retirement Savings Plan (PERIN), the Collective Company Retirement Savings Plan (PERECO) and the Compulsory Company Retirement Savings Plan (PERO).

These three new types of PER are the successors to the old retirement savings plans, which can no longer be marketed since 1 October 2020, although plans set up before 2019 are not being replaced. Thus:

• The compulsory company PER is the successor to the Article 83 contracts: it is opened by the employer to the benefit of all employees or an objective category of employees and is subscribed to under a supplementary professional pension scheme in which I am not authorised to intervene.
• The personal PER is the successor to the PERP (popular retirement savings plan) and Madelin plans, etc.: this plan is subscribed to on an individual basis and gives rise to the opening of a securities account or membership of a group insurance policy. Note that I am only competent in the first case, since the second involves an insurance product.
• The collective company PER (sometimes called PERCOL) is the successor to the PERCO: it is set up by the employer to receive profit-sharing and/or incentive bonuses and any matching contributions distributed by the employer to its employees. It is opened with an account keeper. The complaints relating to these retirement savings plans are those that I traditionally deal with.

In any event, given that my remit is limited to disputes involving financial products, I will deal with the dispute if the complaint relates to the time period for transferring to or from a PERECO and the employee is challenging their employee savings scheme account keeper (on this subject, see the October 2022 dossier).

Whatever the nature of the PER (personal, collective company or compulsory company), it is made up of three compartments to facilitate transferability:

1. The first compartment is devoted to voluntary payments (distinguishing between deductible and non-deductible payments).
2. The second covers payments linked to employee savings schemes (profit-sharing, incentive schemes, CET payments for leave not taken and matching contributions).
3. The third is for compulsory employee and/or employer contributions.

Depending on the origin of the sums paid into or transferred to the PER, the relevant plan compartments will be funded. Below is a summary table of the possible fund sources for the three compartments of the different types of PER:

* distinguishing between deductible and non-deductible payments

I should point out that each compartment is subject to its own rules, particularly in terms of taxation, redemption terms and early release. Therefore, as a result of a transfer to a PERECO, I must examine the provisions specific to the origin of the sums, which do not necessarily come from employee savings schemes, and which the account keeper is obliged to apply.

The dossier presented this month is a perfect illustration of this. As the sums from Ms H’s ‘Article 83’ contract were compulsory contributions, they could only be transferred to compartment 3 of her PERECO, and could not be transferred to compartments 1 or 2 under any circumstances. Consequently, in view of the rules applicable to compulsory contributions (compartment 3), her request for early release on the grounds of purchasing a main residence could not be granted.

In this respect, my examination of the PACTE Law explanatory statement note was clear: this is the legislator’s express intention. As an exception to the harmonisation of the conditions for releasing retirement savings, the law stipulates that a transfer of retirement savings from an ‘Article 83’ contract only allows for early release on grounds beyond the control of the saver, and therefore excludes the release of these retirement savings for the purchase of a main residence.

Similarly, voluntary contributions (compartment 1) are either deductible or non-deductible, with very different tax consequences depending on the choice made by the beneficiary (on this subject, see the April 2024 dossier).

With regard to redemption terms, as I was able to find out when working on a dossier, it should be noted that sums paid into compartment 3 of a PER can only be redeemed in the form of an annuity ^[1], unless the monthly amount of the annuity does not exceed 110 euros: in this case, a redemption in capital is possible ^[2].

In sum, while the PACTE Law appears to harmonise retirement savings schemes, a number of specific rules do apply depending on the compartment in question. Savers need to be aware of these specific features and be vigilant when making a transfer decision.