Starting 1st July 2024, a new savings product called the Plan épargne avenir climat (PEAC) will be available for people under 21 years old in France.
PEAC is an innovative savings tool that allows young people to contribute to the ecological transition while benefiting from tax advantages and tailored account management to secure their capital over the long term.
Title Image credits: Ministère de l’Économie et des Finances, France.
Summary of PEAC
| Whom | People less than 21 years old and resident in France. Only one account per person. |
| Where | Banks, Insurance companies, etc |
| Contract Duration | Allowed until the account holder is 30 years old |
| Maximum Balance | 22,950 € excluding interests earned. Same as Livret A. |
| Interest Rate | No fixed interest rate. Returns depend on the results of the investments made. |
| Withdrawal | Funds are blocked until the account holder becomes 18 years old. More conditions apply. |
| Taxation | Exempt from taxes and social charges |
What is a PEAC?
The Plan épargne avenir climat (PEAC) is a new savings product for young people under 21, designed to fund the ecological transition. It is available from 1st July 2024 as part of the Green Industry Law “la loi industrie verte“.
Key Features of PEAC
- Target Audience: Exclusively for young people under 21 residing in France.
- Product Nature: Unlike regulated savings accounts like Livret and LDDS, the PEAC allows investments in various financial instruments such as stocks, bonds, etc.
- Objective: Funds are invested in projects with ISR (Socially Responsible Investment) or France Finance Verte labels to support the ecological transition.
- Automatic Closure: The PEAC automatically closes when the account holder becomes 30 years old.
How to open a PEAC account?
To open a PEAC, you must be under 21 years old and a resident of France. It can be opened at:
- Banks
- Investment firms
- Insurance companies
- Mutuelle, etc
The PEAC can be structured as an investment account (like a CTO) along with an associated savings account or a capitalization contract, depending on the PEAC provider.
How does a PEAC work?
The PEAC is a medium and long-term investment with a minimum lock-in period of five years.
Unlike regulated savings accounts like Livret A, the capital invested is not protected because the performance is linked to fluctuations in the financial markets.
Contributions and Limits
- Maximum Amount: Contributions are capped at 22,950 euros, similar to the Livret A.
- Flexible Contributions: Contributions can be made at any time.
- The sums paid into the PEAC account are used to invest in funds contributing to the financing of the ecological transition.
- These investment funds must benefit from the labels “investissement socialement responsable (ISR)”, “Greenfin“, etc.
- You can refer to the AMF report on socially responsible investment (SRI) in collective investment schemes.
Fund Locking
- Locking Period: Funds are locked until the account holder becomes 18 years old with a minimum lock-in period of five years.
- For example, if you open a PEAC at the age of 20, the lock-in period will end at the age of 25 years.
- Partial Withdrawals: After the lock-in period and until the age of 30, partial withdrawals are allowed. However, no further contributions can be made after a withdrawal.
Account Management
- Piloted Management “gestion pilotée”: Similar to a Target Maturity Fund, The allocation of funds evolves to secure the capital as the maturity date approaches, with at least 70% of assets in low-risk investments two years before liquidation.
- So, a PEAC account is comparable to a PER account in this aspect.
- Free Management “gestion libre”: You can also choose free account management instead of the gestion pilotée mode.
- Regardless of the management method you have chosen, the institution with which you have opened a PEAC must inform you each year of the performance of your investment.
- Management Fees: Management or account maintenance fees are applicable, unlike a Livret A or LDDS.
Early Withdrawals
- Early withdrawals are possible in cases of the account holder’s death, disability, or the death of a parent.
Taxation
The PEAC offers attractive tax benefits,
- Exemption: Interest, dividends, and capital gains are not subject to income tax or any social contributions.
- So, a tax-free investment account with the benefits of a savings account.
PEAC vs Livret A
| PEAC | Livret A |
| Target Audience | |
| People less than 21 years old and resident in France | All public irrespective of age, nationality, or residence in France |
| Where? | |
| French Banks, Insurance companies, Investment Forms, etc | French Banks |
| Contract Duration | |
| Allowed until the account holder is 30 years old | No Limits |
| Maximum Account Limit | |
| 22,950 € excluding interests earned | 22,950 € excluding interests earned |
| Investments | |
| Stocks, bonds, etc. and so there is no capital protection | Not applicable. It’s a savings account with guaranteed returns |
| Interest Rate | |
| Depends on the performance of the funds | 3% guaranteed until 31st January 2025 |
| Interest Payment | |
| Depends on the account | Calculated every 15 days on the 1st & 16th day of the month. Paid annually on 31st December |
| Withdrawal Limits | |
| Funds are blocked until the account holder becomes 18 years old. | Available any time of the year |
| Taxation | |
| Exempt from taxes and social charges | Exempt from taxes and social charges |
Sources & References
General
- Banking: Savings Accounts in France
- PEAC: un nouveau placement financier destiné aux plus jeunes service-public.fr
- Plan épargne avenir climat (PEAC) : How does it function ? economie.gouv.fr
- What savings products can you use for your child? economie.gouv.fr
Laws
- Que contient la loi industrie verte ? economie.gouv.fr
- Article 34: LOI n° 2023-973 du 23 octobre 2023 relative à l’industrie verte
- Décret n° 2024-547 du 15 juin 2024 relatif à la mise en œuvre du plan d’épargne avenir climat et au contrôle de la détention des produits d’épargne réglementée
Disclaimer
- Any finance-related information shared is not professional legal, tax, or investment advice.
- The information provided is of an educational and general nature and is not investment advice within the meaning of Articles L. 321-1 and D. 321-1 of the French Monetary and Financial Code.
- Investment carries risks of loss and past performance does not guarantee future performance.
- You should consult a financial advisor for any professional advice.
