The Court of Auditors wants to get rid of the old housing savings plan, which pays too much
The old Housing Savings Plan (PEL), a small gold mine for savers who subscribed earlier than 2011, is below the scrutiny of the auditor’s court docket which on Monday requested the state and banks to scale back their remuneration contemplating its price. Currently, the PEL, whose remuneration contract is fastened as soon as and for all at the time of subscription, doesn’t appear very advantageous at the fee of 1% since 2016, when a booklet A doubles (2%) and a booklet brings well-liked savings (LEP) ) 4.6%.
But that is not at all times the case: earlier than 2015, cash put into the PEL earned greater than 2%. Even between 2000 and 2003 its yield rose to 3.27% and crossed 4% earlier than 1994. In concept, PEL is a medium-term funding: it makes it potential to get hold of a mortgage on favorable phrases for the buy of an actual property or monetary work. . Since 2011, it’s only potential to feed for 10 years and gather curiosity for 15 years.
PELs subscribed earlier than 2011 proceed to accrue curiosity indefinitely at charges set throughout the contract, encouraging some savers to maintain onto them for longer. A scenario condemned by the court docket’s auditors in a report launched Monday: “ELPs have moved away from the historic goal of dwelling possession to develop into long-term savings merchandise,” he argued. According to the institute, the old PELs resembled “an precise annuity, particularly for the profit of older holders with excessive arrears”.
Last 12 months, the old PEL averaged 4.5% remuneration.
Interest paying banks have been decrying this example for years. “These old PELs are now not in step with the market and represent a big price for financing the financial system”, the French Banking Federation (FBF) assured AFP.
According to the Banque de France, PELs opened earlier than 2011 represented 107.7 billion euros final 12 months with a median remuneration of 4.5%, in contrast to 3.04% for all PELs. In a letter to the court docket of auditors printed on Monday, its governor Francois Villeroy de Galhau described the scenario as an “incongruity”.
There is not any monetary return for the state
PELs additionally price the state cash as a result of these opened earlier than 2018 are exempt from earnings tax till their thirteenth birthday and, when spent on loans, permit them to obtain a state bonus (up to a most of 1,525 euros), the quantity of which relies on the curiosity obtained. The Court of Auditors has estimated a value of 411 million euros for the state in 2022 for this old PEL “with out the state receiving any monetary return or directing assets in direction of jobs of basic curiosity, as is the case with regulated brochures”, he confused.
He suggests “enthusiastic about a tool to erase” the benefit of the old PEL over different savings merchandise, which he considers “much less justified and even disproportionate”. Economy Minister Bruno Le Maire replied on Monday that he had “famous” the court docket’s suggestions and happy himself by saying that the court docket’s findings on PELs “can legitimately query the effectiveness of the allocation of these housing savings” .
For shopper affiliation CLCV: “A promise is a promise”
Old PEL charges are usually not simple to assessment as they’re ruled by contracts between people and banks The difficulty is all the extra delicate as inflation, which reached 5.8% in August over the 12 months in accordance to INSEE, is taking away from savers’ actual earnings.
“A promise is a promise and it have to be revered”, responded AFP Francois Carlier, basic consultant of the shopper affiliation CLCV. If banks determine to scale back the remuneration for old passbooks, it should lead to large lawsuits and injury their picture with their clients, the court docket auditors underlined.
It subsequently identifies different options, resembling a negotiation between banks and their clients to finish PEL, in trade for compensation, or contract modification by legislation in the identify of widespread curiosity in trade for a dedication from the financial institution. For financing precedence initiatives, resembling environmental and power transitions. The FBF confirms that “the career is open to participation in the work it recommends to public authorities” and advocates a regulatory change to the efficiency of the old PEL.