Managing the growth of one’s business, optimizing cash flow, anticipating risks: the business owner invests time and energy in steering their activity. Yet, preparing for retirement is often relegated to the background until it is too late to act effectively. The Retirement Savings Plan (Plan d’Épargne Retraite, PER), established by the Pacte Law of 2019, offers a concrete solution: building long-term capital, tax-deductible contributions, and flexibility at exit. It remains to know how to find the PER that fits one’s business. An overview of best practices.
Why should a business owner be interested in opening a PER?
For many managers of micro and small-to-medium enterprises (TPE and PME), self-employed workers (TNS) or liberal professions, mandatory retirement schemes do not allow them to maintain their standard of living once their activity ends. The Retirement Savings Plan is thus a relevant solution for progressively building a supplementary income, in the form of a lump sum, a life annuity, or a mix of the two, depending on the withdrawal options chosen at retirement.
Beyond retirement planning, PER is also a particularly attractive tax-optimization tool. Voluntary contributions made to an individual PER can be deducted from taxable income up to the ceilings set by regulations. For a highly taxed executive, this deduction can represent a significant tax saving while building long-term wealth.
Business owners can also benefit from employee savings schemes when they implement an employee PER. Depending on their status and that of their company, the contributions made by the company, via top-up, profit-sharing or participation, benefit from a favorable tax and social regime. These amounts are generally exempt from income tax for the beneficiary when invested in the PER, while the company can, under certain conditions, deduct them from its taxable profit and enjoy a more favorable social contributions regime.
Finally, PER offers great management flexibility. Funds can be invested in different financial instruments according to the saver’s risk profile, with either free management or guided management. Although this savings is normally locked until retirement, the law allows early withdrawals in certain situations such as for the purchase of the main residence or following certain life events such as accidents.
Key criteria for choosing a PER for a business owner
The first criterion is the level of fees, which can significantly reduce returns over several decades. One must consider the fees on contributions, management, arbitrage, entry or exit, and ancillary charges.
The quality of investment supports is just as important. A high-performing PER should offer a wide range of investments (low-risk investments, ETFs, SCPI, diversified funds…) to adapt one’s allocation to the investment horizon and risk profile. Management options, such as guided management or progressively securing gains as retirement approaches, are also a real asset.
Finally, it is important to evaluate the quality of the support offered: the insurer’s solidity, simulation tools, digital interface, customer service and additional guarantees can make a real difference on a day-to-day basis.
Mistakes to avoid before opening a PER for a business owner
The first mistake to avoid is choosing a contract without taking one’s status into account. The needs and tax advantages differ depending on whether one is a self-employed worker (TNS) or a salarié assimilé dirigeant. In some cases, a company PER can offer a more advantageous optimization than an individual PER.
Another common mistake: opening a PER solely to reduce one’s tax. If the upfront tax advantage is attractive, the PER remains above all a long-term investment whose withdrawal modalities and taxation must be anticipated.
It is also important to check one’s deduction ceiling before making a contribution, lest one not fully benefit from the tax advantages. Likewise, settling for the contract offered by one’s bank without comparing fees, investment supports or performance can penalize the long-term return on one’s savings.
Finally, the management mode must be adapted to one’s investor profile. Free management is aimed at experienced savers who have the time to steer their portfolio, while guided management is better suited for business leaders who wish to delegate their investments. Whatever mode is chosen, it is recommended to regularly review one’s allocation to ensure it remains coherent with one’s age, wealth objectives and investment horizon.
All of our information is, by nature, generic. It does not take into account your personal situation and does not constitute personalized recommendations for the execution of transactions and cannot be considered financial investment advice, nor any invitation to buy or sell financial instruments. The reader is solely responsible for the use of the information provided, and no recourse can be sought against the publishing company of Cafedelabourse.com. The publishing company of Cafedelabourse.com cannot be held liable for any error, omission or inappropriate investment.
