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IPE special report May 2018

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French pension system “to take time to develop”

FRANCE – Following its pension reform in August, France now has a third pillar and extended second pillar pensions system – though development will take time, says the head of the French pension fund association.

“It will take time to develop", Vincent Vandier, executive director of Afpen, the Association Française des Régimes et Fonds de Pension, told the PensMart conference in Frankfurt.

The bill passed in August introduced two new pensions savings vehicles - the PERP (individual savings plan for retirement), and the PPESV-R (an occupational retirement savings plan).

The PERP means that now unemployed French citizens can now save for retirement with tax benefits, and the employed (not solely top-management) can do the same. A limited amount can be saved each year, which, at retirement age, will be paid out in the form of life annuities.

The PPESV-R is an occupational pensions product to which employers contribute a portion of profits, and into which individuals can also choose to top up. This is paid out as a lump sum at retirement.

Denis Auxenfans, head of product development at Societe General Asset Management, feels that the French people are now ready to commit to savings for retirement using these products. This is largely as result of marketing and communication campaigns.

Vandier does not believe it will be "a tremendous market". "It will develop but it will take time. It could take three to five years before we see as much as one billion euros accumulated."

The new products will most likely be distributed through insurance networks, says Auxenfans, with retail banks, IFAs and e-brokers also distributing the PPESV-R products.
But he says more education is needed about investing on a long-term basis. He also advised finding more attractive product names.

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