Retirement Savings Plan: Three Tax Changes to Be Aware Of for 2026
An increase in social security contributions upon withdrawal, the end of tax deductibility after age 70, and an extension to five years for carrying forward unused contribution limits: the PER underwent several adjustments in the fall of 2025. Here’s a breakdown of these changes and their implications for savers.
Regularly criticized for the tax-saving opportunities it offers to the wealthiest taxpayers, the retirement savings plan (PER) was once again at the center of budget discussions in the fall of 2025. The result is two minor cuts and a welcome relaxation of the catch-up rules. For savers who have made the PER a cornerstone of their retirement strategy—particularly those in high tax brackets—these changes warrant careful consideration. They do not undermine the appeal of the plan, but they do alter how it works.
Social security contributions of 18.6% upon withdrawal and end of the deduction at age 70
The first change concerns social security contributions upon withdrawal. Effective January 1, 2026, PER gains are subject to the increase in the CSG from 9.2% to 10.6%—as enacted under the Social Security Financing Act—in the event of a withdrawal. The overall social security contribution rate thus rises from 17.2% to 18.6%. Upon lump-sum withdrawal, the amounts invested (the “contributions” portion) remain subject to income tax at the applicable tax rate, and capital gains are subject to the flat tax, which has now been raised to 31.4% (12.8% income tax + 18.6% social security contributions). In the case of a lifetime annuity payout, the annuity is taxed as a retirement pension, and social security contributions are applied to a sliding-scale tax base: 40% of the annuity between ages 60 and 69, and 30% thereafter.
The first “victims” of this increase are PER account holders whose accounts are maturing or who wish to withdraw their savings to finance the purchase of their primary residence. For everyone else, the compounding effect is in full force. As long as the funds remain within the PER, the income generated is exempt from the 18.6% tax, including interest earned on the euro-denominated fund. The leverage effect that this deferred payment has on the final accumulation is more powerful than one might imagine. Another benefit that remains in place: funds withdrawn early in the event of unforeseen life circumstances—such as the death of a spouse, disability, excessive debt, or the expiration of unemployment benefits—are still exempt from social security contributions, as are the funds transferred to beneficiaries in the event of death.
The second change, which is more structural, is that as of January 1, 2026, contributions will no longer be tax-deductible once the saver reaches age 70. Previously, retirees who wished to continue making contributions to their PER were still eligible for a minimum deduction amount. This option is being eliminated, which restores the PER to its original function as a retirement plan. However, this measure penalizes self-employed individuals and members of the independent professions who, by choice or necessity, must continue working beyond that age.
Unused contribution limits: now carry forwardable for five years
As a reminder, voluntary contributions to a PER are deductible from taxable income subject to two limits: 10% of net professional income for year N-1, which is itself capped at eight times the PASS for year N-1. This year, a taxpayer can thus deduct up to 37,680 euros (an amount that may rise to 88,911 euros for self-employed individuals under a specific tax regime). For taxpayers in lower tax brackets, a minimum deduction equivalent to 10% of the PASS for year N-1—or 4,710 euros—is provided.
The good news comes from the carryover provision. Savers can retroactively take advantage of unused deduction limits from previous years. The 2026 Finance Act extended this carryover period from three to five years, and the provision can be combined with that of a spouse. This extension can be particularly useful for those who receive an unexpected windfall (sale of property, one-time bonus, inheritance), as it allows them to claim tax deductions on larger amounts in a single year.
The order of allocation follows a specific rule. The available amounts, as indicated on the tax notice, must be used in the following order: first, use up the limit corresponding to the premiums paid for the current year; then, if you can afford to contribute more, prioritize using up the unused limit from the earliest year so as not to lose it. However, he recommends waiting until the new contribution limits are clearly specified in tax notices before proceeding with this process.
For clients receiving financial advice, these three changes call for a reassessment of the PER contribution strategy, particularly for high-income earners, the self-employed, and savers approaching age 70. Taxes upon withdrawal are higher, but the PER’s main advantage—immediate tax deductibility at a high marginal tax rate combined with gross capitalization—remains intact.
