When the introduction of the single retirement savings plan (Plan d’épargne retraite unique: PERU) creates misunderstandings among savers

The facts

Mr L. has been retired since September 2020 and told me that he was the holder of a PERCO (the retirement savings plan existing prior to the PACTE Law) opened in the books of employee savings scheme account-keeper X.

Mr L. specified to me that his former employer had decided to transfer the employee savings scheme of its employees and former employees to a new account-keeper Y.

On this occasion, Mr L.'s PERCO plan was apparently "converted" into a PERU plan (single retirement savings plan), without his agreement and without him having received the corresponding documentation or a proposal to liquidate his PERCO plan beforehand.

Now, according to Mr L., the PERCO plan allowed the withdrawal of capital or withdrawal by annuity payments, whereas the PERU plan would allow only withdrawal by annuity payments.

Mr L. told me that he had built an exit strategy of gradually withdrawing his savings in capital, and that withdrawal by annuity payments would be very unfavourable for him. Now, being ill, Mr L. estimates his life expectancy as seven years less than the average. Moreover, as a man, Mr L. explains that he has a shorter life expectancy than that of a woman, which is used to establish the amount of the annuity.

Mr L. estimates his loss at about €15,000.

It is in this context that Mr L. referred the matter to me, to seek compensation for the damage that he considers he suffered due to the "conversion" of his PERCO plan into a PERU plan.

The investigation

I questioned account-keeper Y, Mr L.'s new account-keeper following the collective transfer that had occurred.

The latter informed me that it was Mr L.'s former employer that had taken the decision, by agreement with the trade union organisations, to convert the existing PERCO plan and supplementary pension scheme ("Article 83" contract) into PERECO and PERO plans, and to group them together in a PERU plan, pursuant to the PACTE Law.

REMINDER

The retirement savings plan (PER), created by the 2019 PACTE Law, is available in three forms:

• An individual PER plan (taken out individually): it replaces the PERP savings scheme and the "Madelin" contract and generally takes the form of a life insurance policy. A few rare firms propose a bank PER plan which, for its part, is based on a securities account.
• Two corporate PER plans (taken out via the employer), namely

• The PERECO plan (PER Entreprise Collectif), the successor to the former PERCO plan, is funded mainly by incentive bonuses, profit sharing and additional contributions paid by the employer, as well as voluntary payments by the employee.
• The PERO plan (PER Obligatoire): successor to the former "Article 83" collective contract, is funded mainly by compulsory contributions; it is opened with an insurance company or a mutual company and is based on a group insurance policy.

The latter two plans can themselves be grouped together in a single PER plan, the PERU plan, which then has two separate compartments.

Worth knowing: If the PER plan (PERO or individual PER plan other than a bank plan) has been taken out with an insurance company, the AMF Ombudsman does not have jurisdiction to intervene in the event of a dispute. The plaintiff will have to refer the case to the insurance company's ombudsman.

Account-keeper Y said to me that Mr L. had been informed of these changes by an email dated 22/09/2021, before the effective transfer of his retirement savings scheme.

It also told me that Mr L. could have requested the reimbursement of his employee savings from his former account-keeper X as soon as he retired in January 2020 and before the change of his PERCO plan into a PERU plan in November 2021.

However, account-keeper Y stressed the fact that this "conversion" of the PERCO plan into a PERU plan had no consequences for Mr L. regarding the release of his assets, which were fully available, and could be received in the form of a life annuity or as capital, in a single payment or in a fragmented manner.

Regarding this, account-keeper Y forwarded to me an excerpt from the agreement relating to the PERU plan established by Mr L.'s former employer, mentioning the various exit possibilities.

Accordingly, account-keeper Y told me that Mr L. could release all his assets immediately as capital on the grounds of "Retirement", as he wished.

Recommendation

I have examined the details of this case very closely.

The PERU allows the employee retirement savings plan (PERECO) and the compulsory retirement savings plan (PERO) to be grouped together in a single scheme, with a view to simplifying their management.

In this case, I noted that Mr L. had been duly informed by his new account-keeper Y that his retirement savings plans (former PERCO and PERE/"Article 83" contract) had been replaced by a PERECO plan and PERO plan, and pooled in a PERU plan.

However, Mr L. did not have to give his agreement to this replacement, since this was a decision taken by his former employer, in agreement with the company's staff representative bodies.^[1]

I also noted that Mr L. could have requested the liquidation of his PERCO plan before it was replaced by a PERU plan, since he was already retired.

However, I noted that Mr L. incurred no loss as a result of the replacement of his PERCO plan by a PERU plan, because he could release all his assets in the former PERCO in the form of capital on the grounds of "retirement", as recalled, moreover, by the agreement relating to the PERU plan established by his former employer; also, the tax treatment remained unchanged.

In these circumstances, I told Mr L. that his request for compensation appeared irrelevant, precisely since he had obtained confirmation that he could release all of his assets available on his PERU plan in the form of a capital as he wished. 

But I sent him the "retirement" release form published by the account-keeper, so that the latter might take the necessary steps if applicable.

Lesson to be learned

The "PACTE Law" aims, in particular, to simplify and harmonise employee savings and retirement savings schemes.

That is why it is now possible to pool the new PERECO and PERO plans in a PERU plan in order to simplify the management of retirement savings.^[2]

For companies, this pooling makes it possible to sign a single contract for the PERECO and PERO plans and facilitate their management, grouped in the hands of a single account-keeper.

For employees, this makes it possible to have a single employee savings account and have a single contact person.

However, although they have the commendable purpose of simplification, such changes can be a cause of concern and misunderstanding for savers, as illustrated by this case.

Savers need to be correctly informed - and if necessary reassured - by their account-keeper regarding changes in their retirement savings schemes and the protection of their rights.

In this case, as the saver was reminded, in the context of the replacement of the former PERCO and PERE/"Article 83" Contract plans by PERECO and PERO plans, and their pooling in a PERU plan, only the rights corresponding to compulsory payments into the PERO plan are delivered in the form of a life annuity.

The rights based on the other contributions invested in the PERU plan can still be released in the form of a life annuity or a capital sum in accordance with Article L.224-5, para. 1 of the Monetary and Financial Code.

However, this article provides for an exception when the holder has opted explicitly and irrevocably for the liquidation of all or part of his rights as a life annuity as of the opening of the plan, an aspect to which savers should therefore pay close attention at the time of subscription.