Le Produit d'Épargne Retraite Populaire (Perp) : caractéristiques des détenteurs et projection des niveaux de rentes

The French law called ?Fillon Act, ? which came into effect on August 21, 2003, set up an individual savings contract called PERP (Plan d?Épargne Retraite Populaire) aimed at supplementing public pensions. It is a defined-contribution plan in which contributions are deductible from taxable income up to 10 % of the holder?s annual income. At retirement, benefits are paid in the form of annuities and taxed at a normal rate. We use a large dataset on saving behavior of 9,880 households in order to determine the profile by age, socio-economic status, income, wealth, and tax status of holders of at least one PERP. We show that this savings product has spread evenly across all socio-economic categories. The participation rate is highest for households headed by persons aged 25-34 or 50-54. We use simulated residuals and bracket information available in our dataset to simulate continuous distribution of PERP assets and contributions. We can thus project the future growth of assets in personal retirement plans until age 60 and estimate the annuities that households will obtain after retirement. We find that most households are likely to benefit from a very small annuity, equal to less than 1 % of their last earnings before the conversion of their plans.