When France’s latest pension reforms were passed in November 2010, attention focused on the raising of the legal age of retirement. However, the reforms will also have a significant effect on retirement savings plans. The changes mean that in future, companies will have to adjust the way they handle not only employee retirement, but also retirement savings.
Major features of pension reform affecting companies
- Increased statutory retirement age
The new social security legal retirement age will rise from 60 to 62 years (for people born after 1955), and from 65 to 67 years for a full social security pension, regardless of the years of employment.
- Longer contribution period for full pension
There will be an increase in the contribution period required to qualify for a full social security pension, which will gradually rise to 166 quarters by 2020. However, employees with what are defined as “strenuous” jobs will still be able to take a full pension earlier. This is not fully defined yet, with the Government communicating precise details during the course of 2011.
- Improved equality between men and women
A set of measures will be announced by the French Government in the coming months aimed at reducing current inequalities in benefits provision between men and women.
- Incentives to employ older workers
To encourage employers to retain older employees on their payroll and reduce the costs of early retirement, the Government has introduced an obligation for every company to create a career development plan for employees over 45 to come into effect from 1st January 2012.

Promotion of retirement savings
- Obligation to set up a group pension plan
Employers will be obliged to set up a Defined Contribution group pension plan (Article 83 or PERCO) if there is already a defined benefit plan (Article 39) for a specific category of employees in force. The new rules are already in operation and companies have until the 31st December 2012 to comply with them.
- Holiday allocations to group pension plans
Employees that do not take their full allocation of paid holiday in any given year will be given the option to exchange up to 5 days per annum into a cash equivalent which can then be paid as a single contribution into an Article 83 or PERCO pension plan.
- New tax-advantaged individual contributions
Individuals now have the option to make additional contributions, which will have tax advantages, to their Article 83 group defined contribution plan.
- Early payment of lump sums
The rules regarding possibilities for early payment of lump sums under supplementary retirement plans in the event of financial hardship or on death of a spouse or civil union partner will be relaxed.

Swiss Life Pension in France
Swiss Life Pension in France is well-positioned to assist companies in managing their retirement plans and responding to the new reforms and can provide all types of retirement schemes currently available on the market. Swiss Life has:
- Vast experience in the management of funded pension plans
- A range of tailor-made solutions for large and medium-sized companies
- Expert consultants and dedicated teams for the administration of pension plans
- Guaranteed annuity rates based on the date of affiliation to the contract
- A track-record of award-winning retirement solutions

- Article 39: Defined benefit plan. Arrangements set up for a category of personnel for which the company agrees on an amount of benefit (annuity) paid at the time of retirement if the employee is still part of the workforce.
- Article 83: Defined contribution plan. Arrangements put in place for a category of personnel for which the company agrees on a contribution rate. An account is opened in the name of each employee with full vesting from inception. The savings are then converted into an annuity at the time of retirement. Since the Act reforming the pensions, the employee can make individual payments and gets tax advantages.
- PERCO: Plan d'Epargne Retraite Collectif (Collective Retirement Savings Plan). Optional employee savings plans where the company matches employee contributions. Benefits are paid out as a lump sum or as an annuity.
- PERP: Plan d'Epargne Retraite Populaire. Individual contracts, with contributions deductible from taxable income up to a certain limit. The group version is called the PERE: Plan Epargne Retraite Entreprise (Company Retirement Savings Plan).

For more information
please visit www.swisslife.fr