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Regulated savings (Livret A, LDDS, PEL, etc.) is the main vector of savings for French households. It is sometimes criticized for keeping them away from riskier investments that are more useful for financing the economy. To respond to these criticisms, the Court of Auditors has studied several ways to adapt the economic model of regulated savings without, however, upsetting it.
Regulated savings represent total outstandings of nearly €834 billion, or 14% of household financial savings. As such, it is the main vector of savings for almost all of them. It is sometimes criticized for keeping the French away from more risky investments that are more directly useful for financing the economy. To respond to these criticisms, the Court of Auditors has studied several ways to adapt the economic model of regulated savings without, however, upsetting it.
Modify the booklet A and LDDS ceilings
In its annual report on regulated savings, the Banque de France shows that regulated savings are increasingly concentrated on the wealthiest and oldest categories of households. It is possible to combine a booklet A (capped at 22,500 euros) with an LDDS (capped at 12,000 euros), thus bringing the overall ceiling to nearly 35,000 euros. A finding that raises questions given the tax exemption of interest.
The Court of Auditors considers that such an accumulation of the amounts at the ceilings on the two booklets is not necessarily useful today, especially since it contributes to increasing the tax expenditure. The organization therefore considered several avenues for development. The first consists in merging the livret A and the LDDS by establishing a single ceiling (at most the current ceiling for the livret A). The second is to keep the two booklets but to establish an overall cap around 25,000 euros, which would limit the advantage provided to the wealthiest households.
These two avenues have for the moment been abandoned in the face of the reluctance of the banking profession, which underlines the complex and costly nature of such measures.
Taxation of passbooks
The tax expenditure in favor of the various regulated savings products represents an amount of more than €800 million, including €131 million for the livret A and more than €400 million for home savings. The Court of Auditors estimates that a household holding a livret A and an LDDS would be exempted up to €8 on average, an advantage which remains much lower than the exemptions obtained on other savings products such as unlisted equity capital (around €1,000-2,000 per household), life insurance contracts (more than €90 per household) or the PEA (€41).
The Court of Auditors considers that it is likely that taxing interest on regulated savings accounts would have a non-negligible political cost for a very limited or even no effect of reallocating the savings concerned in favor of riskier products.
Giving meaning to home savings
Home savings contribute less and less to their initial purpose of financing household real estate projects. It is diverted from its objective of home ownership to become a long-term savings product. The flow of new loans has fallen sharply in recent years, leading to almost zero production. The Court of Auditors considers that PELs are a source of cost for public finances and for banks which is no longer justified by reasons of general interest.
At the end of December 2021, the Banque de France estimated that the average rate (weighted by outstandings) of PELs opened before 2011 was 4.51%, guaranteeing an unparalleled return given the level of risk incurred. Also, the Court recommends reducing the benefits granted to beneficiaries of PEL subscribed before 2011, due to the excessive cost that this situation imposes on the financing of the economy overall. She suggests several ways to do this.
The first would consist of unilaterally modifying the contracts by the establishments. However, banking establishments do not seem to favor this solution. Rather than using a unilateral method which would risk having repercussions on their image and their commercial relationship, they could negotiate with their customers the release of their PELs in return for compensation calculated according to the loss of the advantage for the latter. .
The second track would consist of dissuading individuals from keeping their PELs by using tax leverage. However, such a measure would target PELs still escaping tax deductions (i.e. PELs less than twelve years old opened before 2018) and its effect would therefore be limited.
The third possibility would consist in modifying the legal framework of current contracts. However, this would necessarily have to be justified by a sufficient public interest reason. This could result in the possibility for banking establishments to modify the terms of the old PEL while agreeing to contribute to strengthening the global economic model of regulated savings and to increasing the uses of this towards priority investments (ecological transition and energy…). This could also result in the application of a specific rate of remuneration for expired PELs (ie those which have reached their contractual term but whose withdrawal the depositor has not requested).