Home savings plan: “Should you transfer your old PEL to life insurance?”

A Capital reader asks us if he should transfer his old PEL, which will soon be taxed, to life insurance. While this is one option for keeping savings secure, there are many others.

Didier, reader of Capital, sent us this question: “Hello, I have had a PEL open since January 29, 2013, so my savings will be taxed, it seems to me, at the start of 2025. So it must be transformed into life insurance, is that right? What do you recommend to me?” Hello Didier, and thank you for your question which allows us to go into more detail about the alternatives to housing savings plans (PEL). First of all, you are absolutely right: the interest generated by your PEL will be taxed from January 29, 2025. For plans opened since March 1, 2011, “Interest from the first 12 years of the PEL is exempt from income tax. From the 13th year, interest from the PEL is subject to income tax.” (service-public.fr)

Interest subject to income tax unless you opt for the progressive scale

Concretely, this means that future interest on your PEL – paid once a year, on December 31 – will appear in your income received in 2025 for the income tax return that you will complete in spring 2026. This interest is subject to the single flat-rate deduction ( PFU, or flat-tax) of 30%, but you will only have to pay 12.8% in income tax (the 17.2% social security contributions are already withheld every year by your bank before payment of interest).

Please note, Didier, that if you are not taxable, for example, you can request in your declaration to be taxed at the progressive scale. So you won’t have to pay the 12.8% income tax on your interest. Only the 17.2% social security contributions will continue to be collected by your bank.

Before life insurance, think about regulated booklets

If you are taxable, however, and you do not wish to be taxed on the interest on your PEL, several options are possible. First, request closure of the plan from your bank (by email, mail or on site) and place the capital in another savings product. To do this, priority will be given to regulated bank accounts: Livret A, Sustainable and Solidarity Development Account (LDDS) and Popular Savings Account (LEP). The interest produced by the latter is in fact completely tax-exempt, as up to now on your PEL.

However, if you have already reached the ceiling of these booklets, you can actually pay the capital of your PEL into life insurance. But nothing obligatory! You will be free to reallocate this savings to the product you want. With life insurance, you will have the advantage of being able to secure your savings, as with a PEL, if you decide to invest only in euro funds, the guaranteed capital support of life insurance. On the other hand, in terms of taxation, you will have to wait 8 years of holding to benefit from the tax advantages specific to this envelope. In the event of withdrawal before this threshold, you will have to pay the flat tax of 30%, exactly as on your PEL.

Capital answers you

Do you have a question about your life insurance contract, your savings accounts, your real estate investments? Ask our expert who will answer you: capitalvousrepond@prismamedia.com