Employee savings: 5 questions on the extraordinary release of 2022

Posted on September 19, 2022, 3:00 PMUpdated on Sep 19, 2022 at 3:09 PM

To enable employees to mobilize part of their employee savings to cope with the increase in the cost of living driven by the rise in energy prices, the law “on emergency measures for the protection of purchasing power”, was published on Official newspaper on August 17, temporarily opened the possibility of releasing profit-sharing or profit-sharing bonus placed in an employee savings plan. Usually, these funds are not available for 5 years. But this obscene step is framed and subject to the respect of many conditions.

1. Who is affected?

Obviously, only employees who work for a company that has established a profit sharing or participation plan are concerned. In 2020, according to figures from the Ministry of Labor released last spring, 9.5 million people have access to at least one profit-sharing, profit-sharing or employee savings plan, i.e. almost 53 % of non-agricultural private sector employees.

This unique release is not limited to companies with at least 50 employees and which, in fact, must have put in place a mechanism for the distribution of profits to employees. Employees of companies that voluntarily set up such a scheme are also concerned.

Likewise, there are no strict criteria for employees who can request access to blocked funds. Whether they are currently employed by the company or former employees of the latter, everyone is eligible for the scheme regardless of the nature of their employment contract.

Business leaders, presidents, general managers, managers, members of the management board, the spouse of the employee or partner of the manager who are bound by a civil solidarity pact are also concerned. In detail, these are the beneficiaries provided by article L 3332-2 of the Labor Code, as specified in the ministerial frequently asked questions (FAQ) published on September 13.

2. What type of savings and what amount can an employee release?

This temporary early release mechanism does not enable the withdrawal of all money invested in an employee savings plan. Only amounts paid before January 1, 2022 in respect of profit sharing, profit sharing, and possible corresponding employer contributions in connection therewith, may be released before the normal date.

As a reminder, for amounts invested in a company savings plan (PEE), an inter-company savings plan (PEI) and a group savings plan (PEG) – the current envelopes -, the funds not available 5 years.

On the other hand, payments to a collective retirement savings plan (Perco) and its successor, and the collective company retirement savings plan (PER) are not included in the exceptional release. The same applies to voluntary employee payments (excluding profit sharing and participation), amounts invested in a solidarity fund, those allocated to a fund managed by the company (blocking the current account), except in the areas of cooperative production companies. (SCOP), or savings invested in company shares.

In addition to the nature of recoverable savings, the law also limits the amount that can be released. The ceiling is set at 10,000 euros net of social security contributions per beneficiary.

The legislator provides that these amounts are intended for consumption expenditure. They are “therefore not intended to be reinvested in other savings schemes”, recalls the Ministry of Labor’s FAQ. In addition, if the nature of the good or service thus purchased is not specified to obtain early release, the legislator invites employees to keep supporting documents for these costs that may be requested by the authorities in taxes.

3. What fees and taxes apply?

Early release, including within the framework of this destructive device, does not change the tax regime of participation or profit sharing placed in a company savings plan. These amounts remain exempt from income tax. On the other hand, the earnings obtained are subject to social security contributions at a rate of 17.2%.

Result: if the employee wants to release 10,000 euros, he will not receive 10,000 euros, in all phases, in his bank account, but social security contributions will not be taken into account in the capital gain. To understand this gymnastics, the government site, service-public.fr, details a practical example.

Example of a unique release taken from service-public.fr

Imagine that an employee holds 15,000 euros in his PEE: 9,000 euros for profit sharing, 1,000 euros in capital gains and 5,000 euros invested in shares of his company.

The part of the savings that can be released is equal to 10,000 euros (15,000 – 5,000) before the social security contribution. This amounts to 172 euros (1,000 x 17.2%).

So the employee finally recovered 9,828 euros (10,000 – 172).

In addition to this social contribution, the extraordinary release may cause costs to be deducted from the amounts released. The company agreement may provide that their payment is the employer’s responsibility.

4. How do I request a special release?

Companies have until mid-October to inform their employees of their release rights (2 months after the promulgation of the law that took place on August 18). Notified, the employee must make his request in writing, online or on plain paper, to his employer or the organization that manages his employee savings plan. It must be dated and signed.

This unique release is valid temporarily. The request must be sent before December 31, 2022. If the employee meets these conditions, the employer or the account owner cannot refuse the early release.

The ministry advises employees to specify that this request is part of the purchasing power law. In it, the employee must indicate the amount he wants to release and the investment vehicles he wants to liquidate as a priority. “For the same investment medium, it is the oldest rights that are considered paid”, shows the FAQ.

Before sending his request, the saver must think carefully about the amount he wants to recover because he can only make one request to each organization that manages his employee’s savings.

5. When will you receive your employee savings?

Requests and the sending of funds can be managed on the fly by the account holder. So employees will receive their savings throughout the validity period of this unique system, that is from August 18 to December 31, 2022.

However, if a request is made at the end of 2022, the legislator allows the release of funds to take place in the month of January 2023.

Note: this unique release may require signing a company agreement beforehand. If necessary, the beneficiary’s request can only be considered, and the effective release, after the conclusion of this agreement. This situation may arise when the savings plan, where profit-sharing and profit-sharing are paid, is established at the initiative of the employer.

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