PER: A Tax Advantage to Help You Prepare for Retirement
Retirement is almost always accompanied by a drop in income: a salaried executive often receives only 50% of their final salary, while a self-employed person receives between 30% and 50%. The Retirement Savings Plan (PER) is designed primarily to address this challenge: its tax advantage is not an end in itself, but a tool that makes saving more effective. However, it must be used wisely: when consistently funded during one’s working life and carefully managed at the time of withdrawal, it combines retirement planning, tax optimization, and spousal protection.
People tend to think about retirement only toward the end of their careers, and therefore fail to properly anticipate the drop in income. The pitfall: retirement calculators compare future pension benefits to current income, not to the higher income earned at the end of one’s career. That’s why a dedicated product is beneficial: funds in a PER account remain locked in until retirement—except in cases of unforeseen life events or the purchase of a primary residence—keeping them safe from temptation. Accessible starting at just a few hundred euros, followed by a few dozen euros per month in scheduled contributions, it remains a viable option even for households with little or no tax liability: the tax deduction is optional, as the main goal is to set aside savings specifically for retirement. Payments are also flexible: you can suspend, adjust, or top them up at any time, for example, when you receive a one-time windfall.
A tax incentive to be used strategically
The deduction for contributions then amplifies the benefit. A contribution of 10,000 euros at a marginal tax rate of 30% results in 3,000 euros in tax savings. Rather than spending this gain, it’s better to reinvest it: by contributing 13,000 euros the following year, you increase both your capital and your future tax savings. Another good habit: each year, in addition to the current contribution limit, use the oldest of the carryover limits (from three years prior), which would otherwise be lost.
Good news: The limits established starting in 2026 will gradually become carryoverable over five years, compared to three years today. Although it’s often overlooked—since it requires checking a box on the tax return—the pooling of tax-free limits between spouses becomes particularly significant in the event of an estate or a gift: a couple’s combined limits can exceed 30,000 euros, which is enough to eliminate the tax liability for an entire year.
The example of a couple aged 45 and 46, with a reported income of 105,000 euros and paying 14,558 euros in taxes (top marginal tax rate of 30%), illustrates the power of this program. One of the spouses opens an individual PER with managed investment and a balanced profile: an initial contribution of 5,250 euros, followed by 300 euros per month for five years—enough time to pay off a loan—and then 550 euros per month to maximize the deduction limit of 6,750 euros. At an average annual return of 6%, the principal reaches 204,938 euros by age 64—including 115,100 euros in contributions—for a cumulative tax savings of 34,530 euros. When the principal is paid out in installments over 25 years, it provides 683 euros gross per month, compared to 504 euros for a lump-sum payment.
Plan for withdrawal from the outset
Since the amounts deducted are added back to taxable income at the time of withdrawal, it is best to avoid a lump-sum withdrawal and opt instead for this split capital, which is more flexible than an annuity and can be passed on to beneficiaries in the event of death. Annuities are all the less attractive given that, since 2012, their calculation has been based on a unisex mortality table that puts men at a disadvantage. The quotient method, recently approved by the tax authorities, also helps mitigate the progressive tax rate on these redemptions. This consideration must be made at the time of enrollment, as it determines the choice of policy and its management method.
The PER also serves as a form of retirement planning: if designated as the beneficiary, the spouse receives the remaining funds tax-free, and the death of the spouse allows the account holder to surrender the policy without taxation on the amounts that were previously deducted. A new circumstance allowing for early withdrawal was added in September: the serious illness of the account holder’s child. Upon retirement, transferring funds from the PER to a life insurance policy—which is taxed more favorably after age 70—optimizes the transfer of assets to children. Finally, be careful when calculating your tax allowance: the employer’s contribution to a corporate retirement savings plan is deductible—a common oversight. The earlier you start, the less effort is required: even 50 euros per month can help you build up retirement savings.
