How does the People’s Retirement Savings Plan (PRSP) work?

Published on : 18 March 20203 min reading time

In the face of inflation, which causes prices to rise for consumers, it often appears that the pensions received by pensioners are not enough to live decently. It is therefore important for them to find an additional way to increase their income. The retirement savings plan set up by the state is ideal for this.

This system came into being when the government realized that retirees were in financial difficulty and that traditional pensions were no longer able to meet their daily needs. The Popular Retirement Savings Plan (or PRSP) allows any employee to save for when they stop working. In other words, it’s a kind of retirement supplement that will benefit them later.

Here lies its major interest, the employee saves for his own account, the money thus accumulated can be used for other more profitable activities. Indeed, it should be pointed out that when people retire (forced or not), the pensions they receive rarely meet their needs. There will always be a gap in relation to the monthly payments previously received. It is to compensate for this lack that this type of retirement savings plan has been introduced.

How does a PRSP work?

Concretely, membership of a PRSP is made by a legal subscription with the managers concerned, i.e. one of the following service providers/ a bank, an asset management firm or a mutual insurance company. It is brought to the knowledge of each one that such a subscription is entirely exonerated from ISF or ISI, it is the fiscal advantage of the PRSP.

The subscriber concludes with the service provider on the terms and conditions, in particular on the amount of the payments, their frequency and the related fees. In general, future retirees who wish to benefit from a PERP are not subject to any constraint, either in terms of age or PERP payments. Unlike a life insurance policy that requires regular and staggered payments from the outset, you are in control of your choice.

The advantages of PRSP

Persons wishing to subscribe to a PRSP at retirement will be able, once retired and under very specific conditions, to benefit from the entire capital accumulated if they wish to acquire a principal residence. However, they will have to prove that they did not own their home during the last two years before retirement.

In this case, they will receive a life annuity upon implementation of the plan. In the event of death before or during retirement, the annuity may be retroceded to any beneficiary duly designated in the contract (spouse, minor children, etc.) in the form of a life annuity, education annuity, etc.

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