Home savings plan: “What should I do with my old PEL if I don’t plan on borrowing?”

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Josseline, a reader of Capital, is wondering what she should do with her old Home Savings Plan, knowing that she does not want to benefit from the preferential rate loan offered by her PEL. Here is our advice.

Our reader, Josseline, asks us the following question: “Hello, my partner and I are over 70 years old. We have each had a life insurance contract with our insurer for over 30 years. Our Livrets A and Livrets de développement durable et solidaire (LDDS) are full. We also each have a Housing savings plan (PEL) for over 20 years. But we have no intention of using the proposed loan. What do you advise us to do with these?

Hello Josseline, and thank you for your question, which allows us to return to the case of these old PELs that many French people still count among their savings products. According to the Banque de France, 11% of PELs are currently over 20 years oldwhich represents approximately 1 million plans out of a total of 10 million still open today. But compared to their more recent versions, the old PELs have two major advantages.

The ultra-advantageous conditions of PELs opened more than 20 years ago

First, their remuneration – which in the case of PELs, is known at the time of subscription and does not change thereafter. Indeed, before the beginning of the 2000s, the interest rate of these products was much more advantageous than today. Depending on the year of subscription, the remuneration of PELs opened before 2003 could climb to 6.3% for the luckiest. As a bonus, unlike PELs opened since 2018, these old plans do not have an expiration date. The latter is now 15 years, after which the PEL is transformed into a classic savings account.

In your case Josseline, with a PEL that was even opened before March 1, 2011, the advantage is even greater, since as the service-public.fr website reminds us, you can certainly no longer make payments into your PEL, but the latter “continues to produce interest at the rate set in the contract, for an unlimited period»In other words, your PEL will continue to earn you money at a favorable rate until you decide to withdraw the invested capital, which will then result in its closure.

Keeping your old PEL is an option to combine security and performance

Given that your other regulated booklets are already at the ceiling, “you won’t get anything better than your current PEL to ensure both security and such a level of return”points out Mathilde Carrier, wealth consultant in Nîmes. The option of keeping your old PEL is therefore rather judicious. But if you wish to withdraw from it to turn to another investment, you can for example transfer the funds to a life insurance policy that you already have. By betting for example on guaranteed capital vehicles – euro funds – you ensure that you do not lose any of your savings, while currently benefiting from attractive remuneration conditions.

What’s more, life insurance is also more advantageous than the PEL if you want to pass on your capital. “Payments made after the age of 70 are certainly less interesting than if they are made beforerecalls Mathilde Carrier. However, after this age, the premiums paid still allow you to pass on to your beneficiaries up to 30,500 euros tax-free.” Another solution is to invest in a real estate investment company (SCPI) via your life insurance or directly with a management company. An option that presents a risk of capital loss, but which can allow you to obtain a return higher than inflation and a regular income supplement.

Finally, don’t forget that since 2018, PEL interest is taxed upon withdrawal. However, plans opened before 2011 also benefit from an advantage, since only interest generated from the 13th year onwards is subject to income tax. As for social security contributions (17.2%), they are collected each year from the 11th year onwards.

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