Transfer of life insurance to a LégiFiscal PER

The PACTE law (Action plan for the growth and transformation of companies), makes it possible to transfer before 1er January 2023 of sums from life insurance contracts of more than 8 years towards the new PER (Retirement Savings Plan).

  • All of the sums from the redemption must be invested in the PER, before December 31 of the year of the redemption to benefit from the tax advantage.

​A conditional transfer ¶

Several conditions must be met to transfer a life insurance policy to the PER.

  • The life insurance contract is more than 8 years old
  • All of the sums resulting from the redemption must be transferred to the PER before December 31 of the year of redemption.
  • The holder must be more than 5 years from the legal retirement age, ie be less than 57 years old.

The 3 conditions are cumulative to take advantage of this doubled allowance, in order to proceed to a redemption exempt from income tax.

On a life insurance contract of more than 8 years:

The gains made on the capital gains, during a withdrawal, give rise to an abatement is €4,600 for a single person and €9,200 for a couple.

The PS (Social Levies) of 17.2% remain due.

The doubled allowance ¶

In the event that this withdrawal is transferred to an individual PER, the reduction ceilings are doubled. Gains made on life insurance for more than 8 years are then exempt from tax up to €9,200 for a single person and €18,400 for a couple.

​Then the deduction ¶

The sums are paid into the individual PER. They are considered as a classic free payment and are therefore deductible from taxable income, within the limit provided for by law, namely 10% of taxable income, within the limit of 32,908 euros for 2021

The choice of a tax deduction at the time of payment is possible.

A two-step transfer

– Partial or total redemption of the life insurance contract

– Payment of the entire total or partial redemption in an individual PER.

The payment on a PER will be deductible from the taxable income of the subscriber.

To note :

The amount of tax exemption depends on the TMI (Marginal Tax Bracket).

Example :

A payment following the redemption of a life insurance policy of €20,000

If the interested party is on a TMI of 30%, the tax exemption benefit is €6,000

If the TMI is 11%, the amount of the tax benefit will be €2,200.

The deductibility of payments is capped both in total amount:

10% of income from professional activity net of expenses, within the maximum limit of 10% of 8 times the PASS (Annual Social Security Ceiling) of the previous year, i.e. a ceiling of €32,908 maximum deduction for payments completed in 2021

Or 10% of the previous year’s PASS, i.e. €4,113.

Moreover, the deductibility is carried out within the limit of the overall retirement savings ceiling. The amount is calculated on page 4 of the tax notice.

​Benefits of transfer ¶

Income tax reduction. The sums resulting from a redemption in life insurance are considered as a free payment. They are deductible from income tax.

Possibility of leaving a less competitive old life insurance contract (entry and management fees, adapted financial offer).

​Disadvantages of transfer ¶

Taxation in the event of termination of the PER by death is less advantageous than that of life insurance.

The funds on the PER are no longer available, they are blocked until you retire.

However, there is cases of early release.

In the event of death, life insurance remains more advantageous than the PER in the context of an estate.

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