Économie et Statistique n° 348 Effects of Reduced Social Security Charges on Low Wages - Self-Employed and Company Head Incomes - Variations in Individual Incomes in Periods of Unemployment and Employment - Optional Life Annuity Entitlement Mechanisms to Prepare For Retirement...

Economie et Statistique
Paru le : 01/03/2002
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Optional Life Annuity Entitlement Mechanisms to Prepare For Retirement: a Limited Distribution

Jean Philippe Gaudemet

A number of mechanisms are available to supplement pensions provided by the mandatory pension plans (basic plan and supplementary schemes). These mechanisms are optional and provide life annuities. They come in a wide range of forms: subscription may be individual or collective with bodies of varying legal statuses (companies, insurance firms, mutual insurance companies, etc). The tax regimes and prudential regulations designed to protect the contracting parties against excessive risks are not uniform and give rise to certain inequalities of access to life annuities. These optional life annuities would appear to be extremely limited in France. The financial amounts concerned remain modest and the percentage of the population subscribing to such products is relatively low. Restrictive institutional factors add to the natural brake formed by a reticence to relinquish liquid assets and the transferability of capital. Despite the advantages offered by certain life annuity products, the system of taxation tends to favour individual savings products that produce a capital yield. Limits on competition and methods to encourage subscriber self-selection also contribute to restricting the life annuity market and making it inefficient. Lastly, the prudential regulations would appear to be restrictive, while the rules governing financial management limit the return on the investment.

Economie et Statistique
No 348
Paru le : 01/03/2002