Everything You Need to Know About the Perco Corporate Savings Plan

The Group Retirement Savings Plan (Perco) is a corporate savings product for employees; new accounts can no longer be opened as of October 1, 2020. 

However, employees who already have a Perco account can continue to make contributions to it and benefit from it. In this article, we explain everything you need to know about the Perco, how it works, how to make contributions, and how to withdraw your savings.
 

What is Perco?
 

The Perco is an employer-sponsored savings plan for employees, in which their money is invested as an annuity or a lump sum upon retirement. The funds are locked in until the employee retires. As of October 1, 2020, the Perco has been replaced by retirement savings plans (PER), but employees who already have a Perco can keep it and continue to contribute to it.
 

How do you contribute to your Perco?
 

Employees can make contributions to existing PERCO accounts, which are optional unless the company’s regulations specify a minimum annual contribution (which must not exceed 160 euros). To contribute to a PERCO account, employees can use several options:
• Employee savings through profit-sharing or incentive plans
• Transfers from other employee savings plans (PEE or another PERCO)
• Their time-savings account (CET)
• If they do not have a CET, their unused days off, up to a limit of ten per year
• Voluntary contributions capped at 25% of their gross annual compensation
 

Employers may also contribute to the Perco; these contributions are referred to as “matching contributions.” The employer’s contribution must not exceed three times the amount contributed by the employee, nor may it exceed 7,419 euros. The company may also make an initial contribution and periodic contributions, the total amount of which must not exceed 928 euros per year. As of October 1, 2020, employees may convert their Perco into a collective corporate retirement savings plan (PER Collectif), subject to the employer’s decision.
 

How do I withdraw money from my Perco account?
 

Funds deposited into a Perco account are locked in until retirement. However, there are exceptional circumstances under which the money can be withdrawn, such as the death of the employee, their spouse, or civil union partner; disability of the employee, their spouse, or civil union partner, or their children; the employee’s excessive debt; the purchase of a primary residence, the repair of a primary residence following a natural disaster, and finally, the expiration of the employee’s eligibility for unemployment insurance.
 

Otherwise, the funds will be paid out in the form of a life annuity purchased for a consideration, or as a lump sum or in installments. The tax treatment of the PERCO depends on the method of payment. A life annuity payout is subject to income tax, while for a lump-sum payout, the gains realized are subject to social security contributions.