Plan d’épargne dépendance proposal for senior long-term care costs, Digi Mart USA News: French lawmaker Olivia Grégoire, a Renaissance deputy and former delegate minister for small and medium-sized enterprises, has proposed transforming a Plan d’épargne retraite (PER) into a “Plan d’épargne dépendance” (PED) to help seniors cover the costs of loss of autonomy. The proposal appears in a report on the growth and transmission of very small enterprises (TPE) and small and medium-sized enterprises (PME).
In the report, Grégoire makes 26 proposals, including creating the PED on the model of the PER, which allows savers to set money aside in preparation for retirement. The aim would be to let savers anticipate expenses linked to loss of autonomy.
The report states that with increasing life expectancy, dependency has become “the most costly, most feared and least anticipated risk.”
In practice, the PED would extend the PER. When retirees withdraw their retirement savings, they could choose to reinvest all or part of their funds in a PED.
The report says the PED should benefit from the “same tax advantages” as the PER, but it does not specify the tax treatment applicable when capital is withdrawn, which remains to be defined.
The proposal also carries drawbacks. Funds reinvested in a PED would be locked for an additional 10 to 15 years, meaning retirees could only recover their savings from around age 75 or 80 to finance loss of autonomy.
In addition, PED funds would be directed primarily toward financing the development of small and medium-sized enterprises, whether listed or unlisted.
That arrangement raises questions about volatility and liquidity. Investing in companies, particularly unlisted ones, exposes savers to the risk of capital loss and possible difficulty recovering their money at maturity.
The report provides for information on these risks so savers can make informed choices. Grégoire also suggests that capital could be gradually secured as the release date approaches by shifting holdings into more liquid and less risky assets.
