New transparency rules for pricing

This time it’s official. Insurance companies and intermediaries should strive to be transparent about the pricing that applies to retirement savings plans and life insurance policies. A decision detailing the table, which is updated annually by the insurer, was published in the Official Journal.

The creation of a retirement savings plan (PER) was presented as one of the pillar measures of the Pact Act, which is itself one of the pillars of the five-year term, and Minister of Economy and Finance Bruno Le Mayor said in September last year. I explained to. And Bercy’s tenant did not hide his satisfaction when looking at the number of openings (4 million PER at the time, half of which was personal PER). It exceeds our expectations. There was one major drawback. I think the players in the market are too expensive.

Retirement Savings Plans: Costs to Compare Well

Bruno Le Mer made this observation based on a survey published by the Chairman of the Financial Sector Advisory Board (CCSF) in the summer of 2021. Wide range of cost variations from one PER distributor to another, and very high averages (See the table below).

Wide PER cost
minimum maximum
Payment fee 0% 5% for each payment
Membership fee (at the time of opening) 0 30
Fund management fees in euros 0.60% per year 2% per year
Management costs for support at UA 0.50% per year 1% per year
Arbitration fee 0% 5% of the referee amount
Change management mode 0% 1%
Late fees for pensions 0% 3%
Transfer fee 0% 1% of remittance amount

Source: CCSF. A panel of 34 personal insurance PERs.

Average cost of individual PER
Price type average
Payment fee 3.18%
Fund management fees in euros 0.87%
Support management fee at UA 0.85%
Arbitration fee 0.72%

Source: CCSF.
Average calculated based on a panel of 34 personal insurance PERs.

How to compare PER discount rates

Now you can measure the total cost

Bercy has been working on this issue for a long time, eventually reaching a commitment from PER producers to publish a single cost table on the Internet. This document should be standardized and should be comparable before subscribing.

Therefore, Bercy is not limited to this standardized table that is accessible to everyone. In a statement released in mid-February, the Minister announced: As of July 1, 2022, the total charges borne by each account unit or each asset are displayed. From 2023 for pre-contract information and for the 2022 fiscal year annual information campaign.

A ruling detailing how insurers and other PER managers currently have to communicate (exactly July 2022 for documents provided at the start of the contract, 2023 for annual information to policyholders). From) was released on March 6th. Official newspaper.. This is the new standard.

label XXX
Management company XXX
Raw performance of asset N-1 and %
Asset management fees B%
Unit of Account Net Performance AB
Contract management fee VS%
Total cost B + C
Final performance ABC
Fee withdrawal rate X%

Annex to the February 24, 2022 Ordinance on Retirement Savings Plans and Increasing Transparency in Life Insurance Costs

Columns A, B, C and B + C or ABC show the details of the calculation that needs to be performed. in the endNow you can see Standardized table, Total fees and retro commissions to be paid to each fund distributor (banks, brokers, wealth management advisors, etc.) of the contract each year.This same table will be displayed in Pre-contract information PER, by this Please make sure the fee has been deducted before signing..

In fact, after April 1, 2020, a lot of information (ordinary costs, retroactive, etc.) must already be detailed each year in the application of the Agreement Act. This decision adds a new mandatory statement to this annual table and will be available at the opening. Total cost expressed as a percentage..

Same table of life insurance

The same annual communication using this detailed table will also be for life insurance from July 1, 2022 for pre-contract information, and therefore in most cases from the annual information distributed to policyholders in early 2023. Applies.

For PER life insurance, this new transparency should be able to reduce the costs applied in the spirit of Bruno Le Mer. Last September, Bruno Le Mer couldn’t be satisfied with the only transparency. Its purpose is clear. Too high prices will be public and easier to compare, so bet on transparency to force distributors (and obviously banks) to cut costs.

Life insurance: offer comparison