What is the PACTE Law?
The PACTE Law, whose full name is “Action Plan for Business Growth and Transformation,” is a major economic reform adopted in 2019. Its objective is to facilitate the development of French companies, simplify their operations, and encourage long-term investment.
This law introduced numerous measures affecting entrepreneurs, savers, investors, and employees alike. It aims, in particular, to improve business financing, foster innovation, and make the French economy more competitive.
The PACTE Law is particularly known in the wealth management sector for having profoundly reformed retirement savings and modernized several financial schemes.
Why was the PACTE Law created?
The government wanted to remove certain administrative and financial obstacles that could slow down the growth of French companies.
Before this reform, many economic actors believed that the processes for creating, developing, or transferring businesses were too complex. Furthermore, French savings were often directed towards low-risk investments that were relatively unhelpful for financing the productive economy.
The PACTE Law therefore sought to simplify the lives of businesses while promoting a better flow of savings towards French and European companies.
What changes for retirement savings?
One of the most important measures concerns the creation of the Retirement Savings Plan (PER).
Before the PACTE Law, several schemes coexisted, notably the PERP, the Madelin contract, the Perco, and Article 83. This diversity made the system complex and limited savers’ mobility.
The reform created a single framework, the PER, allowing the various retirement savings schemes to be grouped under harmonized rules.
This evolution notably brought about:
- improved clarity;
- facilitated portability between contracts;
- greater flexibility upon retirement;
- the possibility of unlocking savings to finance the acquisition of one’s main residence.
The PER has now become the main retirement savings product in France.
What impact on life insurance?
The PACTE Law also sought to strengthen the attractiveness of life insurance.
It facilitated transfers between life insurance contracts from the same insurer to allow savers to modernize their contracts without losing their tax seniority.
This measure encouraged holders of old contracts to access more diversified and potentially higher-performing investment vehicles.
How does the PACTE Law promote investment in businesses?
One of the central objectives of the reform is to direct more savings towards financing the real economy.
To achieve this, the law facilitated access to certain investments in SMEs, strengthened the development of employee savings, and encouraged employee share ownership.
It also simplified several rules applicable to businesses to foster their growth and their ability to raise capital.
Did the PACTE Law modify the concept of a company?
Yes. One of the most publicized innovations of the PACTE Law concerns the consideration of social and environmental issues in business management.
The reform amended the Civil Code to specify that companies must be managed in their corporate interest, taking into account the social and environmental challenges of their activity.
It also created the concept of a “mission-driven company,” allowing certain companies to officially enshrine a purpose and societal objectives in their articles of association.
What are the effects of the PACTE Law for individuals?
For individuals, the main consequences concern retirement savings, life insurance, employee savings, and investment opportunities in businesses.
The reform has helped make certain financial products more flexible and clearer, while promoting a better flow of savings towards economic actors.
It is part of a desire to develop a long-term wealth vision, oriented towards retirement preparation and the financing of the productive economy.
Should you seek professional guidance?
The changes introduced by the PACTE Law have modified many wealth management schemes, particularly regarding retirement savings, life insurance, and investment. The choice between the different available solutions depends on numerous criteria such as age, tax situation, retirement objectives, and the accepted risk level.
To evaluate the consequences of this reform on your assets and identify the solutions best suited to your situation, it may be advisable to consult a qualified professional. You can search for a wealth management advisor or another specialist listed in the Experts du Patrimoine directory.
