The retirement and employee savings market - France

1.2 The global market

Pension systems differ widely from country to country, making it difficult to estimate the size of the global retirement and employee savings market. However, it is possible to observe the pension market as a whole.

for example, the total amount of retirement pensions worldwide reached ** trillion US dollars in ****. Between **** and ****, the amount of assets increased by **%. We can also note that the ** OECD member countries account for the vast majority of retirement savings plan assets (***).

Total retirement savings plan assets in OECD and other jurisdictions*, ****-**** World, **** - ****, in trillions of USD Source: OECD *other jurisdictions includes all countries worldwide for which data is available

The United States largely dominates the global pension market (***).

Geographical distribution of pension assets in the OECD zone OECD zone, ****, % of total Source: ****

According to the OECD, the significant growth in assets recorded in recent years is largely the result of an increase in the proportion of people covered by a pension plan worldwide.this increase in coverage has been particularly strong in countries with relatively recent mandatory pension schemes or automatic enrolment programs. What's more, in some countries, this increase has gone hand in hand with a rise in contribution rates, which explains the ...

1.3 The French market

retirement savings

According to the DRESS (***) **** report, retirement savings supplement outstandings reached ***.* billion euros at December **, ****. In ** years, between **** and ****, outstandings have increased by **%. In ****, **.* billion euros will have been collected.

Evolution of retirement savings supplements outstanding France, **** - ****, in billions of euros Source: ****

employee savings

On the employee savings side, assets under management by employee savingss reached *** billion euros at December **, ****, an increase of ** billion over the previous year (***) that is driving growth in this market. [***]

Evolution of employee savings assets France, **** - ****, in billions of euros Source: ****

2.1 The French and savings

In addition, it's interesting to observe the savings intentions of the French. Between **** and ****, the proportion of French people who intend to save more increased by * points, from **% to **%. It was in ****, at the height of the pandemic, that the intention to save increased the most (***), a sign that the uncertainty created by the health crisis is driving the French people's willingness to save. At the same time, the intention to dip into savings decreased in ****, and increased again in ****. it should be noted, however, that the survey was carried out in February ****, i.e. before the start of the invasion of Ukraine and the ensuing economic repercussions. The **** data therefore do not necessarily accurately reflect current French savings intentions.

Change in French savings intentions France, **** - ****, in Source: ****

According to the French, the best savings products (***) are not considered the best savings products, and this is holding back growth in this segment.

The best savings products according to the French (***) France, ****, in Source: ****

The following graph shows that in ****, employee savings products and PER (***). As for employee savings plans, *% are considering subscribing to them.

Savings products for which the French plan to subscribe | Savings products already held France, ****, in Source: ...

2.2 Determinants of demand for retirement savings

Retirement savings in France are optional, unlike the compulsory basic and supplementary pension schemes. Retirement savings correspond to what is known as supplementary retirement. [***].

Share of supplementary pensions in total pension schemes (***) :

The chart below shows the share of supplementary pensions in total pension contributions. Over the past decade, this share has varied between *.*% (***).

In addition, we can note that, like contributions to mandatory pension schemes, contribution payments for supplementary retirement have been growing structurally over the past ten years (***).

Share of supplementary pensions in total pension plans Source: ****

in terms of pension benefits paid out, the share of supplementary pensions in total pension schemes is lower, and fluctuates less (***).

Share of supplementary pensions in total pension benefits paid France, ****-****, in billions of current euros and as a % Source: ****

Breakdown of supplementary pension products

The following chart shows the breakdown of contributions by product type. **% of contributions are made to individual products (***). Breakdown of different products in total supplementary retirement savings France, ****, in Source : DREES it should be noted that the PERCO is not a retirement insurance contract, but an employee savings scheme. However, it is included in the graphs above and below, as it is included in the DREES ...

2.3 Determinants of demand for employee savings plans

There are several employee savings schemes: profit-sharing, incentive schemes, PEE and Perco. According to the Dares report of April ****, **.*% of employees had access to at least one profit-sharing, incentive or employee savings scheme in ****. The following graph shows that PEE (***).

Percentage of employees with access to a profit-sharing, incentive or employee savings scheme France, ****, in Source: ****

However, access to these employee savings schemes varies greatly according to company size. Indeed, the more employees a company has, the higher the proportion of employees with access to these schemes:

Percentage of employees with access to a profit-sharing, incentive or employee savings scheme, by company size France, ****, in Source: ****

When we look in detail at the schemes on offer, we can see that they differ according to company size. For example, while companies with fewer than ** employees are more likely to offer a company savings plan (***), companies with between ** and *** employees are more likely to offer a profit-sharing scheme.

Percentage of employees with access to a profit-sharing, incentive or employee savings scheme France, ****, in Source: ****

2.4 Macroeconomic factors

Inflation trends can have an impact on the retirement and employee savings market, as they directly influence households' purchasing power and their ability or willingness to save (***).

Inflation, which between **** and **** was contained below or barely above *%(***), exploded in **** following the war in Ukraine. Indeed, in September ****, compared with September ****, inflation rose by *.*% .

Inflation trend France, **** - ****, in Source: ****

Nevertheless, according to INSEE's latest economic note at the time of writing, purchasing power is expected to fall by just *.*% in **** (***)[***]

Change in purchasing power per consumption unit France, **** - ****, in % (***) Source: ****

The following graph shows that the covid-** pandemic has had a positive impact on household savings in ****, which may be the consequence of the uncertainty generated by the health crisis. Despite a drop in the French savings rate in ****, it remains higher than pre-pandemic levels. Furthermore, the year ****, with its turbulent economic situation following the war in Ukraine, could have an impact on the savings rate in either direction. Indeed, the uncertainty linked to this crisis could lead households to save more in anticipation, but inflation could force them to consume more, which could influence their savings.

Household savings rate France, **** - *****, as % of GDP Source: ****

N.B.: "The savings ...

2.5 Demographic factors

The retirement savings market is closely linked to the country's demographics, both in terms of the number of people able to contribute, and the number of people able to receive benefits. In ****, the French population will number **.* million.

thus, people over **, the main population group receiving retirement benefits, will represent **% of the French population in ****, or around **.* million people. The age group most likely to contribute to a supplementary pension (***), or **.* million people.

French population by age category France, ****, in Source: ****

The aging of the population is a growth driver for the retirement and employee savings market. Indeed, between **** and ****, the proportion of the population aged over ** rose by *.* points to **.*%. According to INSEE forecasts, the proportion of the population aged ** and over is set to continue rising over the coming decades, as shown in the graph below. The players in the sector (***) must take this demographic change into account when managing the balance between benefits and contributions.

Percentage of French population aged ** and over France, **** - *****, as % of total population Source: ****

The number of retirees (***) between **** and ****, is therefore set to continue growing.

number of retirees under the general pension scheme France, **** - ****, in millions Source: ****

2.6 Demand trends: towards increasingly responsible savings?

Ecological issues are becoming increasingly topical in many areas, including finance and, more specifically, savings. In ****, **% of French people will take ecological issues into account at least from time to time when making their savings and/or investment choices.

Answer to the question: Do you take sustainable development issues into account in your savings and investment choices? France, ****, in Source: ****

What's more, even if this isn't always reflected in their actions (***), **% of respondents say that the impact of investments on the environment is an important issue.

Looking more closely at savings, **% of French people believe that responsible or sustainable investments are interesting for savers.

Are responsible or sustainable investments interesting for savers? France, ****, in Source: ****

The ecological impact of different savings products is a factor that can influence a saver's choice of product.

3.1 Structure of the retirement savings market

Breakdown of the retirement savings sector by type of organization

in the supplementary retirement sector, * categories of players can be distinguished: insurance companies (***), mutual insurance companies, supplementary occupational pension funds, employee savings management organizations and provident institutions. [***]

The following three graphs show the breakdown of contributions, benefits and mathematical reserves for supplementary pensions, by type of player.

Insurance companies largely dominate this market (***). They are followed by supplementary occupational pension funds and employee savings management organizations.

note that the Pacte law has opened up the retirement savings market to competition, which was previously in the hands of employee savings management organizations [***].

Breakdown of contributions to supplementary pension plans, by type of organization France, ****, in Source: ****

Distribution of supplementary pension benefits, by type of organization France, ****, in Source: ****

Distribution of mathematical reserves for supplementary pensions, by type of organization France, ****, in Source: ****

The main players in the retirement savings market

Below is a ranking of the organizations that will have collected the most contributions for supplementary pensions in ****. At the top of the list are insurers (Axa France, Swiss Life, AG*R La Mondiale, Generali, Société générale Assurances, etc.axa France, followed by Crédit Agricole and Swiss Life, ...

3.2 Structure of the employee savings market

Below is a ranking of the companies holding the most employee savings assets in France in ****. We can see that there are a few players who are also among the leading players in retirement savings (***), such as BNP Paribas, Axa, Malakoff Humanis and Swiss Life.

In addition,the same categories of players as for retirement savings(***), namely insurers and bancassurers, are also in the top positions.

Source: ****

The employee savings sector is highly concentrated, with * players holding **% of market assets. Aumundi dominates the sector by far (***).

Market share of various asset companies for employee savings schemes France, ****, in Source: ****

3.3 The Pacte Act has turned the market upside down

The Loi Pacte (***) of May **, **** and applied since October * of the same year has * main objectives:[***]

*/ Facilitate the creation and transfer of businesses, and the rebound in the event of failure.

*/ Enable SMEs to grow

*/ Encourage savers to finance the real economy rather than debt (***).

*/ Make companies more socially and environmentally responsible, through better profit-sharing

In the context of retirement and employee savings, it is essentially objectives * and * that have had an impact on the sector. In addition, the Pacte law has resulted in the convergence of retirement and employee savings systems .

The Pacte Act facilitates incentive and profit-sharing schemes, particularly for companies with between * and *** employees in the case of incentive schemes, and for companies with between * and ** employees in the case of profit-sharing schemes, by abolishing the social security flat-rate.

But above all, the Pacte law has enabled the introduction of the PER (***), a single product that has replaced several other products, in order to simplify their management and the legibility of the system.

In detail, the new PER is divided into three sub-products:

The Individual PER (***), which replaces the PERP and Madelin retirement plans. PER Collectif (***), replacing PERCO The Categorical PER (***)

The diagram below ...

4.1 PER offer typology

The table below shows the average of the various fees and the performance according to investor profile (***) of ** PERs on the market in ****:

Source: ****

The various fees applied are as follows

Membership fees: these are the fees for opening an account Instalment charges: these apply to each instalment paid into the savings plan Annual management fee: this is a rate applied to the capital in the plan and deducted annually Arbitration fee: an amount deducted in the event of a change of medium or a change in the structure of the PER

The following table details the various fees and the performance for **** of the main PERs on the market:

Source: ****

4.2 Supply trends: digitalization

Several players are positioning themselves as pure players in the retirement and employee savings market.

For example, Boursorama Banque, an online bank, offers ***% online PER subscription, as with its other services.

The same is true of roboadvisors. This term refers to digital platforms offering automated financial management services, using algorithms based on large data sets and customer profile segmentation. However, this is not a service based on technology alone: human expertise is often associated with this solution. yomoni is a roboadvisor that offers to open a PER on its application.

Other fintechs and insurtechs, such as Linxea and Ramify, take a similar approach

In addition, Nortia, a multi-specialist marketplace for innovative wealth management solutions serving CGPs (***), has launched Nortia Retraite, its new digital platform offering three open-architecture retirement savings plans. The range comprises three contracts (PER Panthéa with AEP, PER Private with Spirica, and PER Enedia with La Mondiale Partenaire. [***]

So, these pure players in the market generally offer products from traditional players in the banking and insurance sectors, in the form of a BtoBtoC model. These pure players are therefore intermediaries. The advantage for the traditional players is that they can reach a wider customer base for their products ...

5.1 PER (Plan Epargne Retraite) regulations

The PER is a new retirement savings product in place since October *, ****. This product is gradually replacing the old retirement savings plans (***) and it is possible to transfer savings from old plans already open to the new PER. [***]

The PER is available in three sub-products:

The Individual PER

The individual PER is a long-term savings product that allows you to save during your working life to obtain a capital sum or annuity when you reach retirement age. It is open to all, with no age or employment conditions.

The managing body must inform the customer about the characteristics of the plan, its management method and its taxation. In addition, each year, this organization must provide information on :

Account performance Financial performance of investments The amount of fees deducted Plan transfer conditions

In the event of the death of the PER holder, the plan is closed. The savings are then paid out to the heirs or beneficiaries specified in the contract, in the form of capital or an annuity.

In terms of taxation, amounts paid into an individual PER plan in any given year are deductible from taxable income for that year, up to an overall ceiling set for each member of ...

6. Segmentation

• Axa groupe
• Crédit Agricole Groupe
• Swiss Life France
• Natixis Wealth Management
• BNP Paribas Banque Privée
• Crédit Mutuel
• Malakoff Humanis
• Yomoni
• Boursorama Banque
• Generali