The Employee Savings Plan (PEE): definition

The Employee Savings Plan (PEE) is a collective savings scheme for employees, as well as for small business owners. Its purpose is to build up a portfolio of securities with the help of the employer. Both the employee and the company are entitled to make payments into the PEE. Except in cases of early release, the funds remain unavailable for a minimum of 5 years. Receiving these funds is subject to certain tax exemptions.

What is a PEE — Employee Savings Plan?

The PEE is considered a collective savings product. It allows employees to build up a portfolio of securities. These consist of subscription warrants, investment certificates, shares, bonds, Sicav, mutual funds (FCP), negotiable debt securities, etc.

The PEE comes in three forms:

• at company level: PEE for Plan d’Épargne Entreprise (Company Savings Plan);
• at group level: PEG for Plan d’Épargne Groupe (Group Savings Plan);
• across several companies not belonging to the same group: PEI for Plan d’Épargne Interentreprises (Inter-Company Savings Plan).

All three schemes operate under the same model.

Who is the PEE for?

Setting up a PEE is optional for the employer. However, it becomes mandatory once a profit-sharing agreement exists within a company.

Where applicable, the Employee Savings Plan must be open to all employees. The only eligibility condition that can be required is a minimum of 3 months’ seniority.

The PEE for business owners

The business owner — regardless of their status — is entitled to the PEE provided their company has fewer than 250 employees. Their spouse or civil partner is also eligible for the PEE, provided they hold the status of collaborating spouse or associate spouse.

The PEE after leaving the company

Any employee holding a PEE may keep it upon leaving the company, whatever the reason: resignation, dismissal, mutually agreed termination, retirement, early retirement, etc.

When leaving the company, the employee receives a general summary of their PEE. This states whether or not the company agrees to cover the account-keeping and custody fees. Indeed, if the employee wishes to keep their PEE open, they become liable for the fees related to registering financial securities on the account and processing all future transactions. If the company does not cover these fees, they will automatically be deducted from the plan’s assets.

Setting up the PEE

To set up the PEE, the business owner must reach an agreement with employees or their representatives. The plan’s presentation must include the information employees need to fully understand it. The following details must therefore appear in the file:

• the date the agreement is concluded and takes effect;
• the seniority conditions required;
• the list of companies concerned, defining the PEE’s scope;
• the term of the plan, which may be fixed or open-ended;
• the conditions for amending the plan;
• the sources of funding for the PEE;
• the terms of payments made by the company;
• a description of the various investment options;
• the lock-up period for the funds;
• the terms for early release of funds;
• the nature and management arrangements of beneficiaries’ rights.

Compliance checks by public authorities

Once the agreement is finalized, the file must be filed on the website of the Ministry of Labour. It is then subject to two types of review: a substantive review and a formal review.

The substantive review

The substantive review checks whether the clauses of the filed agreement comply with the law. It is carried out by the social security contributions collection body linked to the company, which has 3 months to request a modification. If modifications are requested, the PEE’s benefits only apply once they have been made and approved.

The formal review

The formal review is carried out by the DDETS (Departmental Directorate for Employment, Labour and Solidarity). Its purpose is to ensure that the negotiation rules within the company have been properly followed.

The company’s duty to inform employees

Every new employee must be informed by their employer of the savings scheme in place. Management is then required to provide an annual account statement. It estimates the value of your PEE as of December 31 of the past year, specifying the withdrawals and payments made during that year.

Payments into the Employee Savings Plan

Payments into the PEE come either from the company or from the employee.

Company matching contributions

Additional payments made by the company are called matching contributions. They are capped at three times the amount paid by the employee and cannot exceed €3,519.36. This amount can, however, reach €6,334.85 when the employee invests in shares or investment certificates issued by their company or by a related company.

Any company with more than 50 employees must then pay a social package contribution (forfait social).

Voluntary company payments

The company may also make payments even when the employee does not pay any amount into their PEE. In this case, these payments are exclusively dedicated to the purchase of shares or investment certificates issued by the company or by a company within the same group.

Employee payments

The employee is not required to fund their PEE, unless a clause in the plan’s rules requires it. Where applicable, the minimum payment cannot exceed €160.

When the employee decides to fund their PEE, they may use income from:

• voluntary payments;
• profit-sharing (intéressement) provided for under an employee savings scheme linked to the company’s results and performance;
• profit-sharing (participation) arising from the mechanism for redistributing company profits to employees;
• transfers from other employee savings plans, except the Perco (Collective Retirement Savings Plan);
• a CET (Time Savings Account).

The cap on voluntary payments into the PEE

The cap on voluntary payments is calculated per calendar year. It cannot exceed 25% of the employee’s gross annual pay.

There is an exception for funding an FCPE (Company Mutual Fund), which allows the employee to pay in their entire annual pay.

Availability of PEE funds

Funds invested in the PEE, whatever their origin, remain locked in the account for a minimum of 5 years. There are, however, exceptions allowing all or part of the funds to be withdrawn. They must be justified by one of the following situations:

• over-indebtedness;
• termination of the employment contract;
• creation or takeover of a business;
• purchase of a main residence;
• construction, renovation or extension of the main residence;
• marriage;
• entering into a civil partnership (Pacs);
• divorce, separation or dissolution of the Pacs, with custody of at least one child;
• death of the employee, their spouse or their civil partner;
• disability of the employee, their children, their spouse or their civil partner;
• birth or adoption of a third child;
• being a victim of domestic violence.

The employee has 6 months from one of the above-mentioned events to submit their request to release funds from the PEE, except in cases of termination of the employment contract, death, disability or over-indebtedness.

Taxation of the Employee Savings Plan

The taxation of the Employee Savings Plan changes over the different stages of its life.

1 — Taxation of the PEE during the active period

Taxation during the active period is determined by the nature of the amounts paid into the PEE.

• Matching contributions paid by the company are exempt from income tax (IR), up to a limit of €3,519.36, or €6,334.85 in the case of investment in shares or investment certificates issued by the company. They remain subject to the CRDS (Social Debt Repayment Contribution) and the CSG (General Social Contribution).
• Gains made when securities are sold are subject to social security contributions, but are exempt from income tax.
• Voluntary payments made by the employee are not deductible from income tax.
• Profit-sharing (intéressement) is exempt from income tax, up to €32,994.
• Interest generated by the plan is subject to social security contributions but exempt from income tax, provided it is reinvested in the plan.
• If this interest is not reinvested in the PEE, it is included in the income tax calculation.

2 — Taxation of the plan in the event of early release

Any amount withdrawn as part of an early release is exempt from income tax, but remains subject to social security contributions for the portion corresponding to income generated by the plan.

3 — Taxation at the end of the PEE

All amounts received at the end of the PEE are subject to social security contributions for the portion corresponding to income generated by the plan, but are exempt from income tax.