French savings plan to have long-term focus
France’s individual company savings plans for employees (Epargne Salariale) should supplement the country’s basic and complimentary state pensions systems, according to a keynote report presented to prime minister Lionel Jospin.
The report, by inspector general of finance Jean-Baptiste de Foucauld and parliamentarian Jean-Pierre Balligand, entitled ‘L’Epargne Salariale Au Coeur Du Contrat Social’ (Employment savings at the heart of the social contract), proposes the introduction of a long-term savings vehicle, the Plan D’Epargne Entreprise Long Terme (PEELT), to complement the existing five-year savings duration of the Plan d’Epargne Entreprise (PEE).
The PEELT, a voluntary collective agreement offered to all employees, could, the report says, either have a duration of 12–15 years with end capital available in lump sum form, or 10 years with capital released in portions as with the PEE.
Amendments are also proposed to the contributions mechanism, which would see an additional tax ceiling of Ffr25,000 (e3,800)a year freed up on top of the existing PEE level of Ffr22,500 – giving an annual contributions limit of Ffr47,500.
As a long-term plan, stipulations are also made that the fund hold on average at least 50% in equities and be untouchable for the agreed duration, except in certain cases. The funds will be managed by a control board, on which employee representants will hold the majority of the votes.
Arnauld D’Yvoire of the Paris-based Observatoires des Retraites comments: “The report is well oriented, but I don’t believe it is going to bother too many people. When Dominique Strauss Kahn raised the question of reform to the Epargne Salariale, two dangers were expected; one was that it could become a vehicle for bypassing social charges, which seems to have been avoided.
“The other was that the government would try to make it obligatory for everyone, which would mean raising charges for all companies – good in absolute terms but not in practical. terms for smaller companies. The report is fairly ambiguous here.”
D’Yvoire notes that, as with most social advantages of the kind, PEELT will mostly appear in large companies where the personnel is already relatively privileged. “Compared to what the employers feared and the unions hoped for, the report does not propose any very important innovations.”
Jospin will this month declare his programme for social reform, following postponement in February, in which he is expected to map out the future for the country’s troubled retirement system. Hugh Wheelan