PER for minors: end of an option, what alternatives are there to prepare for their future?

The retirement savings plan or in French “plan d’épargne retraite” (PER) was launched in 2019 and has quickly won over savers, particularly parents who want to prepare for their children's future from an early age. However, despite its appeal, the possibility of opening a PER for under-age children has been restricted.

Why was this restriction introduced?

One of the main reasons behind this restriction is that the PER is first and foremost a retirement savings vehicle. It is therefore seen as a scheme designed to prepare individuals for retirement at the end of their career. Opening a PER for minors, who are not yet in employment, seemed inconsistent with the original aim of the scheme.

But then, what is the future for PERs already open to miners?

If I want to keep the PER, it will no longer be able to be funded, but it will return to normal operation when my child turns 18 and tax-deductible payments will once again be possible.

If I want to close my child's PER, he or she will be able to recover all the sums in the envelope. However, as my child is part of my tax household, the capital paid in will be subject to income tax (if deductible payments) and the interest generated will be subject to capital gains tax on the sale of securities.

Finally, I can also transfer the PER to a PEAC.

What are the alternative solutions?

However, there are other solutions for preparing your children's financial future, which, although different from the PER, offer interesting tax and asset advantages.

The Young People's Share Savings Plan (PEAC)

As well as transferring sums from a PER for minors, it is also possible to open a PEAC. Initiated by the French Green Industry Act, the Plan Epargne Avenir Climat (PEAC) is a savings product marketed from 1 July 2024 and reserved exclusively for young people under the age of 21.

Features of the contract:

- No tax (income tax or social security contributions) on capital, gains or capital gains!

- Payments are limited to €22,950.

- The funds selected must have the ISR label or the France finance verte label.

- The funds are frozen until the holder reaches the age of majority (18), and must be held for a minimum of five years (for example, if you open a PEAC when you are 20, the blocking period will end when you are 25).

- The plan closes automatically when the member turns 30.

Life insurance: a flexible, multi-generational tool

It's perfectly possible to open a life insurance policy in a child's name from birth, so that they can build up their capital over the long term!

The advantages :

- Advantageous taxation on interest after 8 years.

- Flexible use, with the option of making partial withdrawals at any time to finance projects (studies, property purchase, etc.).

- Flexibility of the package through the multitude of investment vehicles available.

For more details, please see our articles on this investment vehicle. https://www.wealth-a7.com/fr/actualites/l-assurance-vie-un-placement-long-terme-/

What about the tax benefits of PERs for minors?

For parents who use this scheme as part of their tax optimisation strategy, there are other solutions! We are now entering the last period of the year when you can still take action on your 2024 tax situation, so don't wait any longer - contact us!

As a wealth management firm, our role is to help you choose solutions that are tailored to your family situation, your financial situation and your objectives. The entire Finankap Group team is at your disposal to put in place the investment strategy that's right for you.