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Regulated savings (Livret A, LDDS, PEL, etc.) is the main savings vector for French households. It is sometimes criticized for keeping them away from riskier investments that are more useful in financing the economy. To respond to these criticisms, the Court of Auditors has studied various ways of adapting the economic model of regulated savings without, however, altering it.
Regulated savings represent a total outstanding balance of almost 834,000 million euros, or 14% of the financial savings of households. As such, it is the main savings vector for almost all of them. He is sometimes criticized for keeping the French away from riskier investments that are more directly useful in financing the economy. To respond to these criticisms, the Court of Auditors has studied various ways of adapting the economic model of regulated savings without, however, altering it.
Modify A and LDDS booklet ceilings
In its annual report on regulated savings, the Banque de France shows that regulated savings are increasingly concentrated in the wealthiest and oldest categories of households. It is possible to combine an A booklet (with a cap of €22,500) with an LDDS (with a cap of €12,000), bringing the total ceiling closer to €35,000. A finding that raises questions given the tax exemption of interest.
The Court of Auditors considers that such an accumulation of the amounts in the maximum limits of the two booklets is not necessarily useful today, above all because it contributes to increasing fiscal spending. Therefore, the organization considered various development paths. The first consists of merging livret A and the LDDS by establishing a single ceiling (at most the current ceiling of livret A). The second is to maintain the two booklets but establish a global cap of around 25,000 euros, which would limit the advantage granted to the wealthiest households.
These two avenues have been abandoned for the time being due to the reluctance of the banking profession, underscoring the complex and costly nature of such measures.
Taxation of the notebooks
The tax expenditure in favor of the different regulated savings products represents an amount of more than 800 million euros, of which 131 million euros correspond to livret A and more than 400 million euros to home savings. The Court of Auditors estimates that a household holding a livret A and a LDDS would be exempt from up to €8 on average, an advantage that is still much lower than the exemptions obtained in other savings products such as unlisted share 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 taxing interest on regulated savings accounts is likely to have a non-negligible political cost due to a very limited or even zero effect of reallocating affected savings in favor of higher-risk products.
Make sense of household savings
Household savings contribute less and less to their initial destination of financing household real estate projects. It deviates from its goal of home ownership to become a long-term savings product. The flow of new loans has been drastically reduced in recent years, leading to almost zero production. The Court of Auditors considers that the PELs are a source of cost for public finances and for banks that 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 outstanding balances) on PELs opened before 2011 was 4.51%, which guarantees an unprecedented return given the level of risk incurred. Likewise, the Court recommends reducing the benefits granted to PEL beneficiaries signed before 2011, due to the excessive cost that this situation imposes on the financing of the economy as a whole. 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. Instead of using a unilateral approach that would risk repercussions on their image and business relationship, they could negotiate with their clients to release their PEL in return for compensation calculated on the loss of advantage to the latter.
The second way would be to dissuade people from keeping their PEL by using fiscal leverage. However, such a measure would be aimed at PELs that still escape tax deductions (ie PELs of less than twelve years open before 2018) and, therefore, its effect would be limited.
The third possibility would be to modify the legal framework of existing contracts. However, this would necessarily have to be justified by a sufficient reason of public interest. This could result in the possibility that banking establishments modify the terms of the old PEL by agreeing to contribute to strengthening the global economic model of regulated savings and increase the uses of this towards priority investments (ecological transition and energy…). This could also result in the application of a specific remuneration rate for overdue PELs (that is, those that have reached their contractual term but whose withdrawal has not been requested by the depositor).
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