Product categories
|
Reporting periods
|
||
|---|---|---|---|
| Name | Pillar | Earliest data | Latest data |
| Life insurance - CG | Voluntary (III) | 2000 | 2024 |
| Life insurance - UL | Voluntary (III) | 2000 | 2024 |
| Insurance-based pension savings products | Mixed (II/III) | 2011 | 2022 |
| Public employee pension schemes | Voluntary (III) | 2003 | 2024 |
| Corporate DC plans | Occupational (II) | 2000 | 2024 |
Résumé Le système de retraite français continue de reposer largement sur les flux de cotisations obligatoires du pilier I (par répartition) et du pilier II, avec un taux de remplacement global des retraites de 48 % et une valeur totale des actifs de retraite représentant 11,1 % du PIB français en 2021 (hors assurance-vie et immobilier). Les produits d’assurance-vie, qui sont de loin les produits d’épargne financière individuels les plus utilisés à des fins de retraite par les épargnants français, ont enregistré des rendements réels cumulés avant impôts très contrastés sur le long terme : +30 % au cours des 25 dernières années pour les produits à capital garanti, qui restent dominants, mais -22 % pour les produits en unités de compte, plus promus et à croissance plus rapide, malgré les rendements positifs des actions et des obligations cotées. Les régimes de retraite d’entreprise ont enregistré un rendement net réel positif de +13 % pour les 25 années comprises entre 2000 et 2025. Les produits individuels spécifiquement dédiés à la retraite — Plan Epargne Retraite (PER), régimes des fonctionnaires, etc. — sont en croissance, mais restent encore modestes, et leurs performances sont beaucoup moins transparentes. Les années 2021 à 2023 ont été terribles pour les petits épargnants, et plus généralement pour tous les épargnants qui ont principalement investi dans des produits à revenu fixe (comptes d’épargne bancaires, fonds obligataires et mixtes, assurances-vie à capital garanti), dont les rendements nets nominaux n’ont pas suivi la hausse de l’inflation, entraînant des pertes massives de pouvoir d’achat. De plus, la plupart de leurs revenus nominaux ont été imposés, ce qui a aggravé les pertes déjà importantes du pouvoir d’achat des épargnants français. L’année 2024 a été bien meilleure grâce à une baisse plus importante de l’inflation que des taux d’intérêt, mettant ainsi fin, pour l’instant, à la « répression financière ».
Summary
The French pension system continues to rely heavily on the mandatory pay-as-you-go (PAYG) Pillar I and mandatory Pillar II income streams, with an aggregate replacement ratio for pensions of 48%, and a total value of retirement assets of 11.1% of the French gross domestic product (GDP) in 2021 (excluding life insurance and real estate). Life insurance products—by far the most widely used personal financial product for pension purposes by French savers—had very contrasted long-term pre-tax real returns: +30% over the last 25 years for the still dominant capital guaranteed ones, but -22% for the more promoted and faster growing unit-linked ones, despite positive listed stocks and bonds returns. Corporate pension plans had a positive real net return of +12.7% for the 25 years between 2000 and 2025. The personal products specifically dedicated to pensions—PER, Public employee schemes, etc.—are growing but are still much smaller, and their performances are much less transparent. Years 2021 to 2023 have been terrible to the smaller pension savers, and beyond to all savers who are mostly invested in packaged fixed income products (bank savings accounts, bond and mixed funds, capital guaranteed life insurance), for which nominal net returns did not match the upsurging inflation, resulting in massive losses in purchasing power. In addition, most of their nominal investment income was taxed, adding to the already heavy losses of purchasing power of French savers.
2024 was much better thanks to a bigger drop of inflation than of interest rates, thus ending – for now – the “financial repression”.
10.1 Introduction: The French pension system
Over a 25-year period, from the end of 1999 to the end of 2024, capital-guaranteed life-insurance contracts show on average a positive yearly real pre-tax performance of +1.1% in real terms, while the unit-linked contracts show a negative yearly real return of -1.0%. The worst performing schemes over the long term seem to be the Public Employee ones. Corporate Defined contributions (DC) plans delivered +0,5% on an annual basis before tax. After-tax returns for corporate DC plans would typically be close for the latter due to a favourable tax treatment.
Holding period
|
|||||||
|---|---|---|---|---|---|---|---|
| 1 year | 3 years | 5 years | 7 years | 10 years | Whole reporting period | to... | |
| Life insurance - CG | 0.3% | -1.9% | -1.4% | -1.0% | -0.4% | 1.1% | end 2024 |
| Life insurance - UL | 1.7% | -5.3% | -1.9% | -1.5% | -0.2% | -1.0% | end 2024 |
| Insurance-based pension savings productsa | -4.2% | -1.3% | -0.6% | 0.0% | 0.7% | 0.8% | end 2022 |
| Public employee pension schemes | 0.8% | -1.7% | -2.6% | -2.2% | -1.7% | -1.4% | end 2024 |
| Corporate DC plans | 3.5% | -3.0% | -0.7% | -0.5% | 0.3% | 0.5% | end 2024 |
| a Entry fees apply to this product category but data are unavailable; returns are calculated on the invested part of contributions only | |||||||
| Data: ACPR, France Assureurs, ACPR, France assureurs, Prefon, UMR, AFG, NA, Eurostat; Calculations: BETTER FINANCE | |||||||
Pension savings have been a political issue in 2018-2019 with the PACTE reform which created a new Pillar II/Pillar III pension product called PER (pension savings plan). Since 2022 , the reform of Pillar I pensions has been a much hotter political issue with a very strong opposition of trade unions. The project has been adopted in a watered-down version in May 2023 with the minimum legal age to get full pension rights increased from 62 to 64.
Pension system in France: An overview
Using the World Bank multi-pillar structure, the French pension system mainly relies on:
- Pillar I — the public pension, a Defined benefits (DB) PAYG scheme, which is managed by the State and comprises the basic pension insurance;
- Pillar II — the occupational retirement provision (complementary component), including DB, privately managed and funded by both employer and employee contributions, to which participation and contribution rates are often mandatory, but also corporate DC plans that are not mandatory;
- Pillar III — composed of voluntary retirement savings plan, also privately managed, to which participation is optional, set up by providers for the pension saver on his own (voluntary personal plans), but via saver associations .
- But also life insurance (its main purpose is retirement) and real estate.
| Pillar I | Pillar II | Pillar III |
|---|---|---|
| Mandatory State Pension | Private Occupational Pension | Voluntary Personal Pensiona |
| Basic pension insurance | Supplement of the 50% pre-retirement income target of Pillar I | Divided into different financial retirement savings products |
| Divided into multiple sub-categories of pensions regimes for private sector, private service and special professions. | The complementary component contributions are collected by different designated paritarian institutions, depending on the sector. | Voluntary pension products are tax-incentivised in order to support participation in the third pillar and are mostly DC |
| DB PAYG | DB PAYG/DC | DC |
| Quick facts | ||
| A relatively high old-age dependency ratio of 34.3% (2021)b | ||
| An average pre-retirement income replacement ratio of 48% (2020)b | ||
|
a Including life insurance contracts that are not pension products per se but are mostly used in France for retirement purposes; b OECD data. |
||
Pillar I — Mandatory State pensions
The French state pension system (Pillar I) is divided into several sub-categories of pension regimes for:
- Private sector employees;
- Public service; and
- Special professions (such as the army or hospital workers).
Each pension regime is further organised into two sub-components: (1) The base pension insurance, which incorporates both the non-contributory Pillar 0 and DB Pillar I to which all employees and self-employed individuals must contribute; and (2) The complementary pension insurance, which supplements the basic state pension allowance (Pillar II).
To benefit from the basic pension allowance (assurance vieillesse) of the French social insurance system, a person must reach the standard retirement age, which is currently not the same for all cohorts, thus birth-date dependent.1 The 2023 pension reform was very difficult to achieve politically and increased the legal retirement age from 62 to 64, although it is still politically challenged.
The full pension entitlement from Pillar I is calculated by multiplying the mean annual gross income, by the correction coefficient,2 and by the insurance coefficient, the latter being calculated by dividing the total insured period (limited by a set ceiling in the form of a maximum insurable period) by the maximum insurable period (thus, it cannot be higher than 1, see Caisse Nationale d’Assurance Vieillesse, n.d.) .
Pillar II — Mandatory occupational pensions
Most of the French Pillar II is a mandatory DB, PAYG and privately managed pension scheme, designed to supplement the 50% pre-retirement income target of Pillar I.3
The mandatory complementary component contributions are collected by different designated paritarian institutions, depending on the sector. The largest part of complementary mandatory contributions, those for private sector employees, are collected and redistributed by AGIRC-ARRCO (employees’ pension regimes association). Employer and employee participation in Pillar II is mandatory and usually set up through collective agreements.
In France, Pillar I and Pillar II should cover 100% of all employees receiving a salary.
There is also a small but growing voluntary occupational DC Pillar II (see next sections).
Pillar II/III — Voluntary occupational and personal plans
The third pillar of the French pension system is composed of the voluntary pension plans. It was reformed in 2019, with the PACTE Law creating the PER or “Pension Savings Plan” divided into:
- Occupational PERs, which are:
- Collective corporate PERs (voluntary corporate plans, for private sector employees at large), which are set up by employers either through DC pension funds, which are progressively replacing the existing Plans d’Epargne Retraite Collective (PERCOs); employee participation is voluntary;
- “Mandatory” collective corporate PERs are insurance-regulated PERs which are mandatory for employees, or categories of employees, once the employer has set it up. They are replacing the existing PER Entreprise (PEREs), also called “Article 83”.
- Existing professional or sector-specific personal plans, such as the Contrats Madelin (for self-employed), Madelin Agricole (for the agricultural sector) or the Complémentaire Retraite des Hospitaliers (CRH) for Public Health sector workers, and Préfon (mainly accessible to public employees) have or will be converted into individual PERs.[^cc_france-40] Contributions are voluntary.
- Personal PERs, unrelated to occupation:
- Individual PERs (“People’s Retirement Savings Plans”), sub-divided into insurance-regulated contracts with capital guarantee (including Préfon and Corem, see below) or linked to units in Undertaking for Collective Investment in Transferable Securitiess (UCITSs) or Alternative Investment Funds (AIFs), and into securities accounts. The insurance regulated individual PERs are progressively replacing the Plans d’Epargne Retraite Populaire (PERPs) “People pension savings plan” and Contrats Madelin for self-employed workers: the existing balances can be transferred to PERs, and no such new plans can be opened since October 1st, 2020.
The PER can be offered both by insurers and by banks/asset management companies, and beneficiaries are free to choose between the two pay-out options: annuities or capital withdrawals. By law, individual PERs must be subscribed and governed by independent representative saver associations. All PERs are freely transferable to other PERs. However, the 2019 law lifted the 15-year ban on inducements for unit-linked personal pensions in order to try to boost their promotion. The French saver organisation Fédération des Associations Indépendantes d’Epargnants pour la Retraite (FAIDER) estimates that this will cost pension savers at the very least EUR 20 billion over the average life of the PER contract.4
In 2024, the French Government issued a mandatory minimum allocation of contributions to the majority5 of Individual PERs into private assets (for example 8% for the default option for a decumulation time horizon of 20 years or above). One reason for this constraint mentioned in the new French Law is that private equity offers to savers a higher risk/return “couple” than other asset classes. Based on a recent report from the French trade association France Invest, the largest French saver representative organization FAIDER warned that this statement is not validated by the facts: for the last 9 years to 2023, private asset products sold to individuals would have returned much less than listed equity products.6. In January 2025, a research report of the French financial supervisor AMF confirmed the low or negative performance of “retail” private asset products.
10.2 Long-term and pension savings vehicles in France
Figure 10.1 details the assets under management (AuM) for life insurance (mostly used for retirement) and public employee pension schemes.7
| % of total | 2024/2023 | |
|---|---|---|
| Currency and bank deposits | 33.4% | -1.4% |
| Investment funds1 | 5.4% | 9.8% |
| Life insurance & pension funds | 33.2% | 3.3% |
| Direct investments (direct holdings of bonds and stocks ) | 28.0% | -3.7% |
| Total | 100.0% | |
| 1 13.9% when including units of insurance-regulated products. | ||
| Data: Banque de France | ||
Second pillar
Collective occupational pension savings (voluntary) products are still limited in size in France, despite the recent development of the DC long term and pension corporate plans.
Collective occupational insurance-based personal pension products
In total, mathematical reserves stood at EUR 113.8 billion end of 2023 (France Assureurs 2025b). For insurance-regulated corporate DC plans under “Article 83” of the French tax code (PERE), mathematical reserves stood at EUR 62 billion at the end of 2024. For insurance-regulated DB plans (“Article 39” of the French tax code), mathematical reserves stood at EUR 31 billion at the end of 2024.
Corporate long-term and pension savings plans
The total assets of French DC corporate savings plans (Plan d’Epargne Entreprise (PEE) + PERCO + collective PER)8 increased by 6.5% in 2024 to EUR 200 billion. The number of members in those plans increased to 12.8 million people in 2024.
The PERCO, exclusively dedicated to pension investments, is still less “mature” than other pension plans, since it started in 2004, but continues to grow quite rapidly. Since October 2019, PERCO have begun to be converted into the new “collective PER”. Assets under management amounted to EUR 34 billion at the end of 2024 (+15% over 2023). 240 700 companies propose this type of plans to their employees.
PERCO and collective corporate PER are quite similar to the United States (US) Corporate pension plans (“401k”) in their design. However, they are generally not invested in general purpose mutual funds like UCITSs, but mostly in specifically dedicated French-domiciled AIFs called Fonds Communs de Placement d’Entreprise (FCPEs).
Third pillar
Life insurance contracts
Ordinary life insurance contracts are not specifically designed for pension purposes. However, retirement is the main objective of French savers who subscribe to these insurance contracts, and they are by far the main long-term financial savings products used in France.
From 2014 to 2023, contributions to unit-linked contracts rose more than those to contrats en euros —i.e., capital guaranteed contracts, misleadingly called “with profit policies” in the United Kingdom (UK)— and their share in total mathematical reserves increased from 17% to 29% (see Table 10.5).9 This increase can be mostly attributed to net inflows (contributions minus benefits). Unit-linked contracts accounted for 13% of premiums to life insurance in France in 2012 and 43% in 2023.[^cc_france-10]
[^cc_france-10] Source: ACPR, 2024.
| Unit-linked contracts | Capital-guaranteed contracts | All life contracts | |
|---|---|---|---|
| 2016 | 284 | 1 586 | 1 871 |
| 2017 | 328 | 1 590 | 1 919 |
| 2018 | 328 | 1 589 | 1 917 |
| 2019 | 372 | 1 684 | 2 056 |
| 2020 | 416 | 1 747 | 2 163 |
| 2021 | 488 | 1 694 | 2 182 |
| 2022 | 437 | 1 318 | 1 755 |
| 2023 | 494 | 1 337 | 1 831 |
| 2024 | 545 | 1 370 | 1 915 |
| Change 2024/2023 | 10.3% | 2.4% | 4.6% |
| Data: ACPR; Calculations: BETTER FINANCE. | |||
In 2014 a new life insurance contract, the Eurocroissance, was created. The contract does not guarantee the invested capital in case of withdrawal until eight years following subscription. This new type of contract is intended to encourage savers to accept a higher level of risk in the short-term for potential better long-term returns, for example by investing more on equity markets. By the end of 2023, those contracts amounted to only EUR 11.1 billion of mathematical provisions,10 probably at least partly due to the ultra-low interest rates until recently, making it challenging to generate a decent return. Since 2016, insurers are allowed to transfer unrealised capital gains from their general assets covering capital guaranteed contracts to the *Eurocroissance} contracts to boost returns.
Insurance-based pensions saving products (IBPP)
Plan Epargne Retraite (PER)
Launched in October 2019, individual PERs reached EUR 70 billion in assets by end of 2024 (+25.5% versus 2022, see France Assureurs (2025b)).
Plan d’Epargne Retraite Populaire (PERP)
PERPs were launched in 2004 as insurance-regulated personal pension plans. Thanks to higher contributions and paid benefits remaining low, mathematical provisions in PERP personal pension plans increased from EUR 7.5 billion in 2011 to EUR 20.9 billion in 2020. New PERP contracts are not allowed since October 2020, and PERP provisions were down to EUR 17 billion in 2024 (France Assureurs 2025b). Many PERPs have collectively transferred into PERs since 2019, and some individual participants have transferred their rights to PERs as well.
Contrats Madelin (for self-employed individuals)
Mathematical provisions related to contrats retraite Madelin decreased to EUR 28 billion in 2024.[^cc_france-12] There were 1.363 million outstanding contracts at the end of 2019 (+2.0%). The contrats Madelin were widely used by self-employed individuals because the PAYG system is less generous (and contributions lower) than for employees. New Madelin contracts are not allowed since October 2020. Self-employed turn to PERs since then. [^cc_france-12]: Source: France Assureurs, 2025.
Contrats Madelin agricole
Mathematical provisions of contrats Madelin agricole (plans for persons working in the agricultural sector) decreased in 2024 to EUR 3 billion. 326 000 farmers had an open contract at the end of 2018.
Public employee pension savings products
These schemes have all adopted the new (2019) legal framework of the individual PERs, but they have very specific features:
- They are mostly (Corem) or entirely dedicated to public employees (Préfon and CRH);
- Préfon and CRH are not subscribed and governed by independent associations representing the pension savers (a legal exception to the governance rules of all other individual PERs);11
- Their pension rights are accounted for in “points”, not in euros or in units;
- The annual evolution of the value of these “points” has been lower or much lower than inflation for many years;
All personal pension products in France have to be subscribed by independent savers associations in which the participating pension savers are members of the general assembly, have the right to vote at the general assembly, and have the right to propose resolutions to the general assembly. However French Law still exempts two of the biggest ones (Préfon and CRH) from all these governance rules protecting pension savers’ rights. They could also transform themselves into PERs as soon as 2019 without requiring the approval of their participants as they would for any other pension savings product.
Préfon
Préfon is a deferred annuity plan open to all current and former public employees and their spouses that had 373 000 participants at the end of 2023. It had EUR 13.9 billion in AuM (market value) at the end of 2024, down from EUR 14.2 billion at the end of 2023 (Préfon 2025).
Corem
Corem is also a deferred annuity plan open to everyone but so far mainly subscribed to by civil servants. It had 321 165 participants at the end of 2024 (down from 397 515 in 2016). Its assets under management went from EUR 10.6 billion (market value) at the end of 2021 to EUR 10.9 billion at the end of 2024.12
Complémentaire Retraite des Hospitaliers (CRH)
CRH, a deferred annuity plan13 open to all public employees from the public health sector and their partners, had about 340 000 participants in 2024. Its AuM (market value) amount to EUR 3.3 billion in 2024.14 We could not find more precise publicly available information.
10.3 Charges: Often opaque, high and rising
Available data on average annual charges for savings products are scarce and often inconsistent in France, including from Public Authorities.
Investment funds
According to the Autorité des Marchés Financiers (2025), overall annual fees for equity funds were 1.40% on assets, 1.45% for mixed funds, and 0.86% in 2023, and they would have gone down slightly from previous years. However, these averages are not size-weighted, which introduces a severe bias. For example, the mere increase in the number of low-cost index funds ( exchange-traded funds (ETFs)) would lower the average cost, although they are very little sold to individuals (see infra). Moreover, they only include French-domiciled funds and leave out other UCITSs funds sold to French individuals. Many funds domiciled in other European Union (EU) Member States, in particular in Luxembourg, are also sold to French individual investors. Also, they do not include the impact of entry/exit costs.
Even more important is the fact that the Autorité des Marchés Financiers (AMF) data do not take into account the fact that about two thirds of investment funds offered to French retail investors are sold via insurance contracts’ “units”.
- For equity funds sold via those, annual size-weighted total charges of the funds themselves (French -domiciled and other funds) reached 1.85% on average in 2023, 1.22% for bond funds, and 1.62% overall according to the French trade organization France Assureurs15: much more expensive than the equity and overall retail fund markets estimated by AMF;
- But the full “units” cost was even higher: respectively 2.73% and 2.50%, when including the annual overall average contract wrapper charge of 0.88% paid by investors in funds held via insurance contract, i.e. the reality is that two thirds of French savers pay about double the weight of charges communicated by AMF.
These charges are very high: the average ongoing fund charge for all UK-domiciled “active” funds (both equity funds and all other funds) was only 0.78%, and 0.14% for index funds in 2023. In the US, they are even much lower in 2024 according to the US trade organization ICI: total expense ratios (TERs) are lower still at 0.40% for equity funds (0.14% for equity ETFs) on average, and 0.38% for bond funds (0.10% for bond ETFs).(Investment Company Institute n.d.).
Capital-guaranteed insurance contracts (fonds en euros)
Since 2018, the national supervisor ACPR publishes their annual average ongoing charge on assets, based on a sample of 122 insurers. The published average charge increased from 0.59% in 2023 to 0.62% in 2024,16 but doesn’t include:
- the profit sharing taken by insurers (0.31% in 2019);17
- the underlying fund fees;
- and the impact of any entry and exit fees.
And according to the French trade organization , the overall average ongoing charge on assets is higher at 0.66% (France Assureurs 2025a).
Disclosures of average actual entry fees are very scarce. Les dossiers de l’Epargne computed an average of 3.24% of premiums for 2020, but that is probably using maximum entry fees disclosed by insurers. The French supervisor ACPR disclosed an estimate of the average actually charged entry fee 0.55% for 2023. This is the figure we use for computing returns over the recent years. It is the same for capital guaranteed – and for unit linked contracts.
Unit-linked insurance contracts
ACPR does not disclose any information on the total charges of unit-linked insurance (and the Trade Association publishes data only since 2022), which cumulates at least two annual asset-based fees: the units’ (investment funds) charges plus those of the wrapper contract itself. In relation to the “value for money” exercise initiated in 2023 between the supervisor ACPR and the Trade organization/ France Assureurs, the latter has started to publish data on performance and costs of unit-linked insurance. Contract fees alone account for 0.88% in fees on average per annum on assets.18 Overall, for unit-linked insurance contracts invested in equity funds, the total average fees are estimated at 2.73% per annum using more granular data of the trade organization for 2024.19 About two thirds of investment funds economically held by French households are through these unit-linked insurance contracts. These actual total annual charges are too rarely clearly disclosed to prospects and retail clients either.
These fees dinclude the “delegated management” fees which are growing as more and more savers are directed by insurers and distributors to this “delegated management” in unit-linked contracts. According to France Assureurs, when these delegated management fees are charged, they add an average 0.36% charge per annum.
These total average fees of close to 3% per year do not seem to have gone down, although ACPR has recently (2023) asked insurers to eradicate the most egregious cases via a “Value for money” exercise. For example, the biggest life insurance subscribing association announced an increase of its unit-linked contract annual fees by 35 basis points in 2019.20
Personal and occupational pension plans
There are very few data available on their charges as well as for corporate DC plans. When available, the data tell us that they are on average rather high. For example, Préfon charges 0.60% on assets plus 2% on net investment income for asset management plus a 3.90% entry fee in 2020; lowered to 2.05% in 2022. This does not include the underlying investment fund fees. For unit-linked personal pension products, the French government has lifted the 15-year ban on commissions in 2019, when deciding to end PERP for PERs (see above, previous sections). This significantly increases net charges to pension savers. FAIDER estimates the cost impact for French pension savers to represent a minimum of EUR 20 billion over the life of these personal pension plans. 21 A recent study of the Conseil Consultatif du Secteur Financier (CCSF), the national public advisory financial committee, estimates that the annual ongoing costs of the new equity “units” alone are close to 3%, of which close to 0.90% result from commissions (“inducements,” see (CCSF) 2021). This represents an increase of more than 40% in annual charges for the new PER compared to its PERP predecessor, for which commissions on “units”, if any, have to be credited back to the PERP itself, i.e., to its participants.
This average annual fee close to 3% compares unfavourably with the annual total charges of US individual retirement accounts (IRAs), which are very often below 1%.
The CCSF report also points to the opacity of these total annual charges and recommends the public disclosure of total annual charges of unit-linked PERs, i.e., the sum of the underlying “units’ costs and the wrapper fee”. This was obtained by FAIDER back in 2005, but this disclosure rule was repealed two years later by the French Authorities. The French Government then reinstated the mandatory disclosure of the total annual charges in February 2022 but only on a per unit basis, not at the insurance contract level, and provided only as a pre-contractual information, so , in practice, it is very difficult for the pension saver to access and compare the overall cost of unit-linked contracts, even only per unit.22 This also applies to non-pension specific unit-linked life insurance contracts.
From 2018 to 2022, the ACPR estimated the average annual charges for the capital guaranteed funds in the personal and occupational insurance regulated pension products : 0.39% for 2022. But like for life insurance, this does not include the profit sharing for the provider (0.24% on average in 2018), the underlying fund fees or the impact of entry and exit fees. Exit fees can be very heavy on annuities, typically 1 to 3% of their amounts.
To our knowledge, neither ACPR nor the national trade association publicly disclose any data on the costs of unit-linked personal and occupational pension products, although they are now a major part of the PERs.
10.4 Taxation
For PERs, PERPs and public employee schemes (Préfon, Corem, CRH, which are now PERs as well), contributions are deductible from taxable income with a minimum of EUR 4637 and up to 10% of total professional income with a tax deduction ceiling (EUR 37 094 in 2025). For non-salaried workers (former Madelin contracts), the ceiling is higher at EUR 87 135. Withdrawals are fully taxed. Annuities are taxable like pensions with a 10% fixed haircut (with a global ceiling on all pension income of EUR 4321 in 2025). They are also subject to “social contributions”, currently standing at 9.10% (7.4% in 2017).
Since August 2012, the taxation of employers’ contributions to corporate savings plans (PEE and PERCO) and DB plans (“Article 83”) increased from 8% to 20% (with some exceptions).
The general rise in taxation of savings also impacted life insurance. In 2012 the rate of “social contributions” increased from 13.5% to 15.5%, and again in 2018 to 17.2% on nominal income.
The overall taxation of all long-term financial savings was again globally increased from 2018 onwards, with the creation of the “PFU” or “flat tax”. It amounts to 30% for most nominal investment income except for life insurance contracts after eight years (24.7%, or 17.2% for annual divestments below EUR 4600 for an individual, and below EUR 9200 for a couple). And direct long-term investments in equities are no longer taxed at a lower rate than short term ones: the exponential negative impact of inflation on long-term investment values and income is no longer taken into account except for real estate investments.
On the other hand, the wealth tax on all financial assets was abrogated from 2018 on (but not on real estate).
| Product categories |
Phase
|
Fiscal Regime | ||
|---|---|---|---|---|
| Contributions | Investment returns | Payouts | ||
| Life insurance - CG | Taxed | Exempted | Exempted | TEE |
| Life insurance - UL | Taxed | Exempted | Exempted | TEE |
| Corporate DC plans | Taxed/Exempted | Exempted | Taxed/Exempted | Variable |
| Public employee pension schemes | Exempted | Exempted | Taxed | EET |
| Insurance-based pension savings products | Exempted | Exempted | Taxed | EET |
| Source: BETTER FINANCE own elaboration, based on French tax code. | ||||
10.5 Performance of French long-term and pension savings
Real net returns of French long-term and pension savings
Equities and bonds
In 2024, the European equity market (dividends reinvested) returned +9% after +16% in 2023 (see Figure 4.3). Over the last 25 years (end 1999 to end 2024), it returned a total of +192%. French inflation over the same period was +78%. So, despite two sharp downturns (2000-2002 and 2007-2008) plus other drops in 2011, 2018, 2020 and 2022, European equities delivered positive nominal and real returns over the whole period.
Packaged long-term and pension products in France are also invested in non-French European equities. Therefore, the European equity universe can be considered an appropriate benchmark for their equity returns, although it is quite conservative, as US equities performed much better over the period, and now represent more than 60% of the World’s total equity markets’ capitalization .
The same applies to bond where the most appropriate general benchmark can be considered European bonds.
Life insurance
Life insurance – Capital-guaranteed contracts
The after-tax real returns of guaranteed life insurance contracts have plunged back deeply into negative territory from 2021 (-2.4%) to 2023 (-1.9%). With lower inflation, and higher bond interest rates, net real returns were back to positive in 2024 (+0.4%). Such returns should be assessed from a long-term perspective: the last data available from the industry trade body indicate that outstanding life insurance contracts were open for 12 years on average. These contracts — although of a long-term nature — are invested only 9% in equities.23
Over a 25-year period, cumulated pre-tax real returns of guaranteed life-insurance contracts were +30%, and varied from a maximum annual performance of +3.8% in 2001 to a negative performance of -4.5% in 2022 (see Figure 10.3).
After-tax real returns are presented in Table 10.7. In the most favourable case, where savers who —after a minimum of 8 years after the first subscription— do not redeem more than EUR 4600 per annum (see section on taxation), real returns after tax are slightly better.
These returns do not take into account the net accruals to the insurers’ reserves for profit sharing (Provisions de participation aux bénéfices or PPB), which are legally required. They must be returned to the life insured within 8 years of their inception. They are then included in the annual return. French regulators allowed insurers to book most of these profit-sharing reserves into their shareholders’ funds for prudential purposes from 2019 fiscal year. This is not an incentive for insurers to use these on average large profit-sharing reserves to offset low or negative annual returns, as pointed out by the French supervisor.24 Indeed, the outstanding amounts of these reserves stood at 1.9% of total mathematical reserves at the end of 2013 and — despite recent drops — stand at 4.3% of total provisions in 2024.25
Following capital-guaranteed life insurance reporting rules, capital gains or losses are not accounted for in the disclosed returns in Table 10.7.
In 2012, taxation increased by 200 basis points, because of the rise in social contributions from 13.5% to 15.5%. In 2018, social contributions rose again to 17.2%. As taxation is applied to nominal returns, any rise in inflation increases the tax rate on real returns (increase in purchasing power) which reached 76% in 2017, as shown in the table below. For 2018, 2019, and from 2021 to 2023, as the real income before tax was negative (loss of purchasing power), taxing nominal income had the effect of deepening the real loss for life insurance savers further, i.e. taxing real losses. In 2024 the tax rate on capital guaranteed life insurance real income was above 75%.
| Year | Disclosed return | Real return before tax | Real return after tax | Real return after tax1 |
|---|---|---|---|---|
| 2000 | 2.4% | 0.6% | 0.3% | 0.5% |
| 2001 | 5.3% | 3.8% | 3.1% | 3.5% |
| 2002 | 4.8% | 2.6% | 2.0% | 2.3% |
| 2003 | 4.5% | 2.1% | 1.4% | 1.8% |
| 2004 | 4.4% | 2.1% | 1.5% | 1.8% |
| 2005 | 4.2% | 2.4% | 1.6% | 1.9% |
| 2006 | 4.1% | 2.4% | 1.6% | 1.9% |
| 2007 | 4.1% | 1.3% | 0.5% | 0.8% |
| 2008 | 4.0% | 2.8% | 2.0% | 2.3% |
| 2009 | 3.6% | 2.6% | 1.8% | 2.1% |
| 2010 | 3.4% | 1.4% | 0.7% | 1.0% |
| 2011 | 3.0% | 0.3% | -0.3% | -0.1% |
| 2012 | 2.9% | 1.3% | 0.7% | 0.9% |
| 2013 | 2.8% | 1.9% | 1.3% | 1.5% |
| 2014 | 2.5% | 2.4% | 1.8% | 2.0% |
| 2015 | 2.3% | 2.0% | 1.5% | 1.7% |
| 2016 | 1.9% | 1.1% | 0.6% | 0.8% |
| 2017 | 1.8% | 0.5% | 0.1% | 0.3% |
| 2018 | 1.8% | -0.1% | -0.5% | -0.4% |
| 2019 | 1.3% | -0.3% | -0.6% | -0.5% |
| 2020 | 1.1% | 1.1% | 0.9% | 1.0% |
| 2021 | 1.1% | -2.2% | -2.5% | -2.4% |
| 2022 | 1.9% | -4.5% | -5.0% | -4.8% |
| 2023 | 2.6% | -1.4% | -2.1% | -1.9% |
| 2024 | 2.6% | 0.9% | 0.2% | 0.4% |
| 1 for redemptions below EUR 4600 per annum. | ||||
| Data: ACPR, France Assureurs, Good Value for Money, French tax code, Eurostat; Calculations: BETTER FINANCE | ||||
These average returns have masked important differences depending on distribution networks and governance up to 2022: for standard contracts distributed by banks, the 2020 average nominal return was less than 1.08%, whereas the return for contracts subscribed by independent associations was 1.56%.26 Higher annual average fees for bank insurers (0.65% versus 0.58% for traditional insurers in 2020) and higher profit-sharing reserves are part of the explanation. Considering that contracts distributed by banks represent about 60% of the French capital guaranteed life insurance market, this returns gap constituted an opportunity cost of about EUR 6 billion for 2020 alone for savers getting their capital-guaranteed life insurance contracts from their bank instead of from independent savers’ associations. In 2023, this long term trend stopped as bank insurers eventually made some use of their profit sharing reserve, and many insurers offered boosted returns on new premia to better capture the upswing in bond interest rates. In the recent years, many insurers have also offered higher returns to savers investing a minimum part in units instead of in capital-guaranteed options.
Life insurance – Unit-linked contracts
Nominal returns were pushed upwards by the rise in European stock prices from 2009 to 2024, with few negative years (2011, 2018, 2020 and 2022) and by the overall very positive performance of the European bond markets. Despite the long period of positive European equity returns, unit-linked contracts still have a very negative cumulative return net of inflation since the end of 1999 of -22% (see next section and Figure 10.5).
Over a 25-year period, real returns before tax of unit-linked life-insurance contracts were volatile. The worst performance was recorded in 2008 (-23.9%) and the best one in the following year (+12.2% in 2009).
Life insurance – All contracts
In order to compute the real return achieved by an investor who would have subscribed to a life insurance contract at the end of 1999 and who would have withdrawn his funds 25 years later, one has to subtract the entry costs paid in the year of subscription, as these fees are not taken into account in the disclosed returns. We estimate that entry costs in 2000 represented 2.76% on average of the investment,27 to be deducted from real returns that year. For more recent time horizons, we used the only other and much lower disclosed average figures we could find: 0.75% for capital guaranteed contracts and 0.55% for UL contracts for 2023 (Comité Consultatif du Secteur Financier 2025). Also, annual contract fees on assets are already taken into account for capital guaranteed contracts by the insurance industry body (France Assureurs), but not for unit-linked ones in its annual “key figures” until 2021. Contract fees have therefore been added back whenever they were not taken into account.
An average saver has thus received a cumulated net real pre-tax return of 30% for this 25-year period of investment on guaranteed contracts, and a negative one of -22% on unit-linked contracts. On a yearly basis, the rates of returns would be +1.1% and -1.0% respectively. It is worth noting that, although unit-linked contracts are riskier for subscribers, they nevertheless provided cumulated returns that were much lower than those of the guaranteed contracts over the last 5 years. Such a lower—and negative—real performance over 25 years is primarily due to:
- much higher fees (see the fees and charges section above): about four to five time higher for the dominant equity and mixed asset units,
- and to the fact that mostly expensive actively managed funds’ retail share classes are offered and promoted, while few low-cost funds such as index ETFs (less than 4% of total unit-linked assets in 2024 according to the Trade body), or institutional, or clean share classes of actively managed funds are.28 Independent research determined that over the mid and long-term, high charges hurt net performance of equity investment funds on average. This in turn may be due to the mostly higher sales commissions (“inducements”) for highly charged funds.
Capital markets as a whole (European bonds and equities) provided a strong positive real performance over the same period.
Figure 10.5 shows that the pre-tax real performance evolution of unit-linked contracts is well correlated to that of capital markets, but massively below those over time, making unit-linked a high-risk and low-return offer over the last 25 years. Given the volatility of UL insurance annual real returns before tax, they were not as low for all time horizons shorter than 25 years, but they were also negative for shorter holding periods (for example for 2 to 10 years holding periods to 2024).
Insurance-based pension saving products (IBPPs)
It was impossible to find any public consolidated average data on the performances of insurance-based pension products: neither the French public supervisor ACPR, the French trade body France Assureurs and the recently created “Observatory of financial savings products” provide any figures, despite the development of the PER since their launch in 2019.
This contrast between the increased transparency of performance and costs of life insurance at the aggregate – average – level, and its absence for insura nce-based pension savings, despite their importance for the wellbeing of citizens, is worrying. The NCA should fix this.
Individual PER (PERin)
According to GoodValueforMoney.eu, aggregate nominal performance for the new PERs’ fonds en euros (capital guaranteed investment option) launched at the end of 2019 has been better than for ordinary life insurance contracts between 2019 and 2021 but was similar in 2022 (1.89% versus 1,92%) and very much below inflation. We could find no overall performance data for unit-linked PERs (the vast majority).
Plan d’Epargne Retraite Populaire (PERP)
A majority of PERPs are structured like ordinary life insurance contracts in the accumulation phase: a combination of capital guaranteed funds (fonds en euros) and “units” representing investment funds. A minority of PERPs are structured like deferred annuities, similar to the main pension savings products for public employees (see next section).
It was impossible to find global long-term return data on PERPs before 2011 and after 2021. The insurance industry body publishes the average return of ordinary capital guaranteed (fonds en euros) and unit-linked life insurance contracts (see previous sections), but not that of insurance-regulated personal pension products such as PERPs and PERs. Based on the disclosed nominal returns of a majority of PERPs collected by the French Supervisor ACPR only from 2011 to 2021, the weighted average nominal return of the capital guaranteed PERPs (fonds en euros) was 1.08% in 2021, similar to the average return of ordinary capital guaranteed life insurance contracts.
This can be surprising, since PERPs enjoy a much longer duration of their liabilities, which should allow for a higher allocation to equities which have performed much better than bonds since 2011. The returns of PERPs should also be boosted by the rule unique to PERPs according to which the commissions (inducements) on units (funds) must be credited to the PERP, and, in practice they are credited to the capital guaranteed fund. On the other hand, PERPs are on average more recent than ordinary life insurance contracts and therefore so is their bond portfolio, which generates lower returns than older bond portfolios. In 2021, pre-tax real returns of French personal pensions (PERP) became very negative; on average -2.2%.
Occupational deferred annuities (Madelin, PERE and Article 39)
The nominal returns of occupational deferred annuities were higher (1.81% in 2021) and did not decline as much as for PERPs. This could be explained by older fixed income portfolios yielding higher rates, and by higher discount rates (taux techniques) forcing insurers to deliver higher returns. Charges may also be lower than for PERPs, but cost data are missing specifically for these pension products. Since 2018, the French supervisor ACPR publishes the average annual cost (0.39% in 2022) but that is for the capital-guaranteed option of all insurance-based pension saving products (IBPPs) combined. Again, no cost and performance data on unit-linked and schemes in “points” are disclosed by the French national competent authority (NCA).
Unfortunately, it also did not identify separately the historical returns and costs of the pension products for self-employed individuals (“Madelin”, many of which are subscribed and supervised by independent pension saver associations), from the employer-sponsored DC plans (PERE) or DB plans (“article 39”). And ACPR stopped disclosing their average return in 2022. Following the European Commission’s request to the European supervisory agencies (ESAs) to improve the transparency of past performances and fees, it is urgent to collect, analyse and disclose these data.
Public employee pension schemes
It is challenging to evaluate the real returns of these deferred annuity plans to the participants. To start with, up to 2010, it was not mandatory for those plans to disclose investment returns. Following action by BETTER FINANCE’s French member organisations, a 2010 Law made this a legal requirement from 2011 onward.29 Préfon has also started to give an indication of its economic returns (taking into account the annual evolution of the market value of all assets in the portfolio) in its annual report.
Then, these schemes disclose the pension rights in “points”, not in euros or in units. The evolution of the value of the points does not permit to compute the annual return to participants on their pension savings, which is very different from the investment returns of the product’s portfolio. This data can only help compute the real evolution of the pension rights over time, or, in other words, the evolution of the purchasing power of the annuities paid to the participants. BETTER FINANCE had to do this computation, as it is not a disclosed —though essential— information from the product providers.
Préfon
Préfon had not published its 2024 report as of end August 2025. It published an accounting return (net of fees) on its investment portfolio of +2.18% (excluding real estate and private equity) in 2023 versus +3.05% in 2022. However, as mentioned above, the accounting return does not take into account the changes in the market value of assets (the market value of the bonds-laden portfolio dropped by 20.6% in 2022, and recovered partially in 2023). Préfon’s investment portfolio is still heavily tilted towards fixed income (80% of total in 2024, and equity weighing only 13%, in accounting, not market value terms). This seems an inadequate asset allocation for the long-time horizon of the pension plan, and an improvable reporting as the accounting value has little relevance to assess its performance. The portfolio return in 2023 was +9% according to Préfon , but it does not specify if it was gross or net of charges.
Part of the investment return has been set aside in the past in order to replenish reserves. In 2010, the French Supervisor ACPR decided that Préfon reserves were not sufficient and forced Préfon’s insurers to contribute EUR 290 million of their own funds (as of 2013-12-31) to help Préfon balance its assets and liabilities.30 At the end of 2016, this contribution from the insurers amounted to EUR 333 million (Préfon 2017) despite the massive cuts in pension rights for those who retire after age 60 decided in 2014 and 2017 (see Figure 10.6).
In 2017, in relation to the entry into force of the Solvency II Directive, French law was modified to move to use the market value of assets instead of their historical cost (accounting value). This enabled Préfon to show at last sufficient reserves and solvency ratio, but—up to now—not enough to allow for reducing or even capping the loss of purchasing power of its pensions since 2002. Thanks to this change in solvency rules, the ratio of assets to liabilities of Préfon increased from 97.5% in 2016 to 133.2% in 2024, allowing it for the first times in many years to increase the nominal value of its annuities from 2017 on. But from to the end of 2024, despite these increases, the real value (purchasing power) of its participants pensions rights (for those who retire at the age of 60) shrank again by 12% (+8% nominal increase versus a +23% inflation).
In addition, only since 2012 is the value of the participants’ accumulated savings communicated individually to them, and unfortunately with more than a one-year delay (this essential information should be released sooner), and just as an “estimate”. It was therefore impossible to compute a real rate of return individually and for all participants with the data made available by the Plan up to 2019 (see below the new approach).
Another difficulty for deferred annuity products is to translate the impact of portfolio returns (and other factors such as the capital conversion rate into annuities, the discount rate and the evolution of annuities paid) on the actual long-term return for the pension saver. One proxy return indicator is the annual rate of pension rights’ and annuities’ increases before tax for several years (see Figure 10.6).31 Préfon participants who contributed in 2002 and who will retire at the age of 60 in 2025 will have lost 23% of the real value of their pensions (before tax)[^cc_france-35]. The advertised objective of Préfon to maintain the purchasing power of pensions has not been fulfilled since 2002 and Préfon remains silent on the perspectives to reduce this loss of the real value of pensions in the future. This key performance information is not publicly disclosed,32 except for the first time in 2023, but only in the annual report in a section called “technical aspects”.
[^cc_france-35] Savings into Préfon (like into PERs and into Corem) are income tax deductible, but the annuities are fully taxable. Both savings and annuities bear social levies (prélèvements sociaux).
This return indicator, however, does not include the discount rate embedded in the conversion ratio of accumulated savings to annuities. But this discount rate varies from one year to another, and also varies according to the actual retirement age—which is not disclosed.
Also, this indicator is only valid if one exercises his liquidation rights at age 60. But very few people can now retire at age 60 due to the postponement of the legal age to retire with full Pillar I pension rights to between 62 and 67. For example, if one exercises these rights at the age of 65, starting from the year 2026 on, the initial annuities have been reduced by 17.3% in nominal terms from 2013 to 2017), even though Préfon always guaranteed its participants at subscription that its pension annuities could never be reduced in nominal terms. In real terms it is much worse (-36% lost since 2002 to 2024), as shown by the lower plot in Figure 10.6.
It is difficult to compute the evolution of the Préfon annuities paid after tax, since they are taxed at the marginal income tax rate on pensions and salaries (plus social levies) and since contributions have been deducted from the taxable income for income tax purposes (but not for social levies).
An alternative approach mentioned by Préfon since its 2023 annual report, is to use the new valuation of transfers or redemptions of accumulated pension rights in capital. But these redemptions in capital are allowed only in limited cases since 2010, and are very rare. For valuations done since 2019, those are based on annual revaluation coefficients computed on contributions. But they are computed on contributions net of the 3.9% commissions charged until 2021. Nevertheless, Préfon now acknowledges the value of pension rights does not keep up at all with inflation despite this being its stated objective. And they are on average below the historical returns of other capital-guaranteed long-term products such as capital-guaranteed life insurance (see Figure 10.3), and far below the returns achieved by Préfon itself on contributions invested (e.g., for 2023 + 1.98% revaluation versus + 9% for the portfolio return).
Corem
UMR, the provider of Corem publishes the annual accounting return on its investments but does not specify whether these are gross or net of fees. The accounting return for 2024 was +3.62% versus +5.01% in 2023. Its asset allocation is less inadequate than Préfon’s for a long duration pension plan: 24% in equities including close to 6% in private equity). However, this accounting return does not take into account the changes in the market value of assets either. In addition, and more importantly, all the investment return of the Corem assets has been set aside to replenish reserves. It is therefore impossible to compute a collective real rate of return.
The deferred annuity mechanisms of Corem are similar to those of Préfon, with the same difficulties in estimating the real return for the pension saver. Therefore, we also use the evolution of the annuities’ values as a proxy return indicator here (Figure 10.7). Corem has been in deficit for a very long time; the main—undisclosed—tool of its recovery plan in place since 2002 is not to increase the nominal value of annuities served. As a result, the annuities served by Corem will have lost a whopping 34% of their real value before tax (purchasing power) over the last 22 years, since Corem has not increased them for many years, pocketing the return on its portfolio for other purposes, and has announced in April 2021 to its participants that the nominal value of their pension rights as of January 1st, 2022 will be reduced by 12.6%. These figures are before tax. This key and catastrophic performance information was not clearly disclosed to the public and to new participants.
The reality is even worse since, in November 2014, Corem announced new measures to reduce its reserve gap by further reducing the returns for participants: they now need to be 62 years of age to get the full pension rights instead of 60 years of age (thus losing 2 years of pensions), and the minimum guaranteed return on pension contributions was lowered from 2.3% to 1.5% from 2015 on.
The financial situation has been very difficult as its reserve gap (difference between its assets and the present value of its pension liabilities) reached EUR 2.9 billion at the end of 2014, as measured using French common prudential rules at that time.33 At the end of 2015, Corem obtained permission from the French Government to use a minimum discount rate of 1.50% (instead of 0.59% according to the previous rule) to compute the present value of its liabilities, helping it to reduce its reserve gap to EUR 1.3 billion at the end of 2016.
In 2017, the French Government allowed deferred annuity schemes such as Corem to use the market value of assets instead of the accounting (acquisition cost mostly) one, to compute its assets/liabilities coverage ratio. This new rule improved its coverage ratio to 98.2% at the end of 2018, but it went down again in 2019 and in 2020 to 91.8%. Otherwise Corem would have been in breach of its Recovery Plan which required it to cover at least 90% of its liabilities. Since 2016, the Corem rules also allow it to reduce the nominal value of annuities under certain conditions, contrary to the commitment that was provided to participants when they joined. Thanks to the massive cut in pension rights as of January 1st, 2022, the coverage ratio has jumped to +143%, end of 2024 at the expense of participants.
The distribution of new Corem contracts has resumed in 2019, despite the continuously escalating losses inflicted to its participants. In 2023, despite complaints to the ACPR, the product is still actively distributed and without any visible and intelligible warning about its catastrophic performances and about its massive recent cut in its pension rights. End of 2023, pension rights were revalued nominally by 6% and another +3.5% end of 2024, but that has only stabilized the real loss to participants since its inception in 2022, still amounting to 34% end of 2024.
CRH
BETTER FINANCE could not access any publicly disclosed annual report on CRH. Even its pre-contractual publications do not disclose past performance. Because of an ongoing restructuring that started in 2008, the real returns of this plan are probably low and below inflation. For the last eight years (beginning 2018 to beginning 2025), CRH annuities’ nominal value has increased only by 5.3% overall, against an inflation of 23.6%%; representing a loss in the real value of the pension rights of participants of 15% (10% loss for Préfon participants and 11 loss for those of Corem over the same time). This crucial warning on historical real returns is not disclosed to prospects. In 2023, its assets were 86% in fixed income, and 14% in equity.
Overall, BETTER FINANCE estimates the loss of purchasing power over the last twenty two years (2002-2024) of participants to the French Public Employee Pension Schemes (Préfon + Corem) to be at -27.0% (-1.4% per annum, see Figure 10.8), based on the relative asset portfolio size of Préfon and Corem, and assuming optimistically that Préfon participants retire as early as age 60 and not later.
Corporate DC plans
With the precious help of Association Française de la Gestion Financière (AFG), the French asset management industry association AFG, we combine information provided by SIX on the performance of each category of funds (FCPEs) with data on their total outstanding relative weight to estimate the overall returns of corporate savings (PEEs, PERCOs and the new collective PERs).34
| Equity | Bond | Money market | Diversified | All funds | |
|---|---|---|---|---|---|
| Cumulated nominal | 91.0% | 72.3% | 39.3% | 81.6% | 80.0% |
| Annualised nominal | 2.6% | 2.2% | 1.3% | 2.4% | 2.5% |
| Cumulated real | 19.7% | 7.9% | -12.8% | 13.8% | 12.7% |
| Annualised real | 0.7% | 0.3% | -0.5% | 0.5% | 0.5% |
| Data: AFG/Europerformance, Eurostat; Calculations: BETTER FINANCE | |||||
Real returns of corporate DC-based plans before tax over a 25-year period, from the end of 1999 to the end of 2024, were overall positive: the yearly average real performance before tax of the aggregate of all funds was +0.5%, which makes French DC plans the second-best performing pension savings product after capital-guaranteed life insurance contracts (before tax). This regards PEEs (EUR 166 billion of assets) and PERCOs and collective PERs (EUR 34 billion).
The overall real returns of PEEs before tax are:
- positively influenced by the positive real return of DC equity funds (with a positive cumulated real return of +19.7%). However, equity funds, which account for about 26% of total outstanding assets (excluding company stock), underperformed equity markets by more than half over the last 25 years: +91% in nominal terms versus +192 % for European equities;[^cc_france-39]
- negatively influenced predominantly by the negative return and surprisingly heavy weight of money market funds (-12.8% cumulated real return and 26% of assets, as much as equities, but it is decreasing to 22% for the PER – pure pension savings – part of the corporate DC plans).
- Also, DC bond funds (around 16% of total assets) returned +72% in nominal terms over the period versus +123% for the European bond market (see Figure 4.3).
[^cc_france-39] STOXX All Europe Total Market TR index in euros.
A factor for this underperformance of DC equity and bond funds relative to capital markets could be the level of fees charged. Unlike corporate DC pension plans (“401k”) in the US, the French ones do not invest in general purpose mutual funds, but in special purpose AIFs called FCPEs, specifically dedicated to these plans. Consequently, French savers are faced with an additional offering of investment funds (about 1100 FCPEs in addition to the about 3500 UCITSs funds already domiciled in France), the average size of these AIFs is quite small, and several FCPEs are merely wrappers of other general purpose funds, adding a layer of fees. Another factor is that equity FCPEs are not 100% invested in equities.
However, the French supervisor, AMF, found that the ongoing annual charges of multi-sponsor FCPEs are on average lower than those of French-domiciled general-purpose funds: 1.31% in 2019 for the 178 diversified (multi-asset) FCPEs analysed versus 1.53% for the general-purpose diversified funds; and 1.46% for the 145 European equity FCPEs analysed versus 1.53% for the general-purpose European equity funds (Autorite des Marches Financiers 2021).
As mentioned above in the costs and charges section of this chapter, these estimates are unfortunately not asset weighted. Still, that is about half the cost of the comparable funds held via unit-linked insurance contracts. In addition, a part of the FCPE fees can sometimes be paid by the employers, not by the employees.. This large difference in the level of ongoing charges seems due to the distribution modes—more “wholesale” for corporate plans, and more “retail” for life insurance (implying commissions paid out of fund charges to distributors).
A limitation of such computations is that performance indices provided by SIX only relate to diversified funds inside the corporate savings plans. They do not take into account the part of corporate long-term savings which is invested in shares of the plan sponsor companies (“company stock”), accounting for 35% (EUR 58 billion end of 2024) of all corporate savings plans.
After-tax returns are often higher
Finally, after-tax returns of French corporate long-term savings plans are difficult to compute globally, but they can often be very close to—or higher than—before-tax ones since their taxation is the most favourable of all long-term and pension savings products in France (redemptions are exempt from income tax and are only subject to “social” levies of 17.2% of net gains). Also, a majority of these savings come from non-taxable profit-sharing income contributed by employees (intéressement and participation) and by employers’ matching contributions.
10.6 Conclusions
Unsurprisingly all packaged long term and pension saving products have rebounded in 2023 and 2024 from the severe real losses in 2022, as both stock and bond markets also rebounded. And “financial repression” (as simply measured by the positive difference between inflation and money policy interest rates) as eventually disappeared in 204 with as large drop in inflation. Over the long term though, charges and selection biases, taxation of nominal long term investment income, but also an asset allocation very tilted towards fixed income) are most to blame for the real cumulated losses in unit linked insurance, in personal pension products, and in Public Employee schemes.
The outlook for 2025 and beyond is not as gloomy as for 2022, but unfortunately still not positive in real terms. Indeed, national tax policies (which most often use the largely fictitious nominal investment income as a tax basis, resulting in taxing very heavily the purchasing power gains and even sometimes losses of pension savers) are unlikely to get better in front of the massive public debt accumulated since the Covid-19 epidemics. And recent statistics as well as public policies do not point to a reduction in overall charges borne by European long term and pension savers.
Worse, the transparency and clarity on the performances of personal pension savings — of the PER in particular — is not improving. Let’s hope the new the Observatoire des Produits d’Epargne Finanicère (OPEF), Observatory of returns and costs of financial savings, by the French Government and the continuation of the “Value for Money” process between the NCA and the insurance industry will help to change this.
Acronyms
- ACPR
- Autorité de Contrôle Prudentiel et de Résolution
- AFG
- Association Française de la Gestion Financière
- AIF
- Alternative Investment Fund
- AMF
- Autorité des Marchés Financiers
- AuM
- assets under management
- CCSF
- Conseil Consultatif du Secteur Financier
- CRH
- Complémentaire Retraite des Hospitaliers
- DB
- Defined benefits
- DC
- Defined contributions
- ESA
- European supervisory agency
- ETF
- exchange-traded fund
- EU
- European Union
- FAIDER
- Fédération des Associations Indépendantes d’Epargnants pour la Retraite
- FCPE
- Fonds Commun de Placement d’Entreprise
- GDP
- gross domestic product
- IBPP
- insurance-based pension saving product
- IRA
- individual retirement account
- NCA
- national competent authority
- OPEF
- Observatoire des Produits d’Epargne Finanicère
- PAYG
- pay-as-you-go
- PEE
- Plan d’Epargne Entreprise
- PER
- Plan Epargne Retraite
- PERCO
- Plan d’Epargne Retraite Collectif
- PERE
- PER Entreprise
- PERP
- Plan d’Epargne Retraite Populaire
- TER
- total expense ratio
- UCITS
- Undertaking for Collective Investment in Transferable Securities
- UK
- United Kingdom
- US
- United States
“Fonpel”, “Carel-Mudel” and “RMC” are pension vehicles dedicated to very specific occupational categories and not covered by this report.↩︎
The correction coefficient, in fact, referred to as a rate which can represent a maximum of 50% of the social security income limit.↩︎
This is because, as indicated above, the full Pillar I pension entitlement at retirement is calculated by multiplying the average annual gross income and the insurance coefficient (which should be 1 in normal conditions) with a correction coefficient, which in normal conditions is set at 50% for private sector workers.↩︎
<faider.org>, June 6th, 2019.↩︎
For the default option of the PER and for all other delegated management options.↩︎
<faider.org>, 22 June 2024.↩︎
As of yet, data are not available for corporate DC plans and insurance-based pension savings products.↩︎
PEE is a corporate long term savings plan where savings are typically blocked for a minimum of five years.↩︎
Source: Autorité de Contrôle Prudentiel et de Résolution (ACPR).↩︎
Source: France Assureurs, 2025.↩︎
Corem eventually set up an independent subscribing and governing saver association in 2022, but there is no mention at all about it in the governance section of its annual reports.}↩︎
Combined assets of Corem (EUR 9.1 billion) and other products managed by the same provider, UMR.↩︎
Rights acquired before mid-2008 do not provide annuities guaranteed for life, but only for 10 to 15 years.↩︎
Guide d’information CRH CGOS 2025↩︎
Source: France Assureurs, 2025; of which 1.44% of ongoing costs and 0.23% of transaction costs. France Assureurs does not provide this breakdown by asset class.↩︎
Source:ACPR, 2025↩︎
Source: ACPR, 2020 (did not publish more recent data).↩︎
Source: France Assureurs, 2024.↩︎
With a serious limitation, both for cost and for performance data: France Assureurs excludes the index ETFs from these asset classes.↩︎
<afer.fr>, 2019.↩︎
<faider.org>, June 2019.↩︎
Arrêté du 24 février 2022 portant renforcement de la transparence sur les frais du plan d’épargne retraite et de l’assurance-vie.↩︎
GoodValueforMoney.eu, 2021.↩︎
“The persisting accruals to the PPB could be also helped by the evolution of rules, which allow insurers since 2019 to include part of it in the computation of own funds eligible to cover capital requirements”, ACPR.↩︎
Source: ACPR, 2024.↩︎
Source: FAIDER. Independent associations representing life insurance contracts holders included AGIPI, AMIREP, ANCRE, ASAC-FAPES and GAIPARE in 2020 FAIDER is a member organisation of BETTER FINANCE.↩︎
Source: OEE.↩︎
The institutional share class of an investment fund bears lower annual fees than the retail share class but requires a higher minimum initial investment. The “clean” share class of an investment fund bears no sales commissions and therefore also enjoys lower overall annual fees.↩︎
Law n° 2010-737 of July 1st, 2010 — art. 35 (V), which modified Article L441-3 of the French Insurance Code.↩︎
Les Echos, 27 December 2010. This information was not disclosed by Préfon to the participants.↩︎
This key datum is very difficult to find, but recently Préfon has been making significant efforts to improve its transparency and disclosures.↩︎
ARCAF, 2019.↩︎
Until 2017, Corem’s recovery plan allowed it to exceptionally use a discount rate of 3% and an older mortality table to compute the present value of its pension liabilities instead of the regulatory 0.78% at the end of 2014 and 1.5% end of 2015. Using the 3% discount rate, Corem assets covered 107.5% of its liabilities at the end of 2015.↩︎
Data published by AFG relate to “FCPE L214-164”. These funds are diversified funds which do not invest in the own shares of the concerned company (“company stock”). There is another category of corporate savings’ funds, the “FCPE L214-165” dedicated funds which can invest without limit in the own shares of the concerned company but there are no data available on the returns of these “FCPE L214-165” funds. The “FCPE L214-164” and other diversified assets represented 62% of all FCPE assets at the end of 2023.↩︎