Compulsory contributions
Compulsory contributions are payments made by your employer to top up certain retirement savings schemes.
How does this type of payment work? Which schemes allow such payments? Explanations.
How does it work?
Only PEROB (mandatory retirement savings plan), PERU (single retirement savings plan), Article 83 and Article 82 plans are concerned.
Compulsory contributions (the employer’s share and potentially the employee’s share) are paid in on a regular basis as long as you are working for the company that has set up the scheme and you fall into the staff category concerned.
Payments are made by your employer directly. You don’t have to do a thing!
If the employer does not finance the compulsory contributions in full, the employee’s share will be deducted directly from your pay and the employer will be required to inform you on your pay slip.
For PERU and PEROB plans, compulsory contributions top up the “Mandatory Retirement Savings” compartment.
If you leave the company that set up this plan, you will maintain the savings thus accumulated.
What is the tax regime applicable?
If you have a PERU, PEROB or Article 83 plan topped up with compulsory contributions, the employer’s contributions will be exempt from income tax up to a threshold of 8% of gross annual compensation not exceeding 8 times the Plafond Annuel de la Sécurité Sociale (PASS, or annual social security ceiling). The following are deducted from this threshold:
- the employer’s contribution to a PERCO (collective retirement savings plan);
- transfers made by the employee from their time savings account to a PERCO, Article 83 plan or PER (retirement savings plan), up to a threshold of 10 days/year;
- transfers made by the employee to a PERCO, Article 83 plan or PER, corresponding to 10 days/year of unused leave, in the absence of a time savings account.
In the event of a surplus, it will be added to the employee’s taxable net compensation.
Where Article 82 plans are concerned, compulsory contributions are considered benefits in kind and therefore subject to income tax in the same way as your salary. The gross salary shown on your pay slip therefore includes the compulsory contributions made into your scheme.