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Regulated savings (Livret A, LDDS, PEL, etc.) are the main savings vector 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 various ways of adapting the economic model of regulated savings without distorting it.
Regulated savings represent a total of almost € 834 billion, or 14% of households’ financial savings. As such, it is the main savings vector for almost everyone. It is sometimes criticized for keeping the French away from riskier investments that are more directly useful for 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 distorting it.
Modify booklet A and LDDS ceilings
In its annual report on regulated saving, the Banque de France shows that regulated saving is increasingly concentrated on the richest and oldest categories of households. It is possible to combine a booklet A (limited to € 22,500) with an LDDS (limited to € 12,000), thus bringing the overall ceiling to almost € 35,000. A finding that raises questions given the tax exemption of interest.
The Court of Auditors believes that this accumulation of the amounts to the ceilings of the two booklets is not necessarily useful today, especially since it contributes to increasing fiscal expenditure. The organization therefore considered several avenues for development. The first is to merge livret A and LDDS by establishing a single ceiling (at most the current ceiling for livret A). The second is to keep the two booklets but to establish an overall cap of around 25,000 euros, which would limit the advantage granted to wealthier families.
These two avenues have been abandoned for the time being in the face of the reluctance of the banking profession, which underlines the complex and costly nature of such measures.
Taxation of passbooks
The fiscal expenditure in favor of the various regulated savings products represents an amount of over 800 million euros, of which 131 million euros for livret A and over 400 million euros for household savings. The Court of Auditors estimates that a household holding a livret A and an LDDS would be exempted on average up to € 8, an advantage that remains much lower than the exemptions obtained on other savings products such as unlisted equity (about 1,000- 2,000 euros per household), life insurance contracts (over 90 euros per household) or PEA (41 euros).
The Court of Auditors considers it likely that the taxation of interest on regulated savings accounts would have a non-negligible political cost due to a very limited or even zero effect of the reallocation of the savings in question in favor of riskier products.
Making sense of home savings
House savings are contributing less and less to their initial purpose of financing household real estate projects. It is being diverted from its home ownership goal to become a long-term savings product. The flow of new loans has declined sharply in recent years, leading to almost zero production. The Court of Auditors considers that ELPs are a source of cost for public finances and for banks 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 loans) of the ELPs opened before 2011 was 4.51%, guaranteeing an unparalleled return for the level of risk incurred. Furthermore, the Court recommends reducing the benefits granted to PEL beneficiaries signed before 2011, due to the excessive cost that this situation imposes on financing the economy as a whole. She suggests several ways to do this.
The first would consist in unilaterally modifying the contracts by the establishments. However, banking institutions do not seem to favor this solution. Rather than using a one-sided method that would risk having repercussions on their image and business relationship, they could negotiate with their clients the release of their PELs in exchange for a compensation calculated on the basis of the loss of the advantage for the latter. .
The second path would be to dissuade individuals from maintaining their PELs by using tax leverage. However, such a measure would concern ELPs that still escape tax deductions (i.e. ELPs under the age of twelve opened before 2018) and its effect would therefore be limited.
The third possibility would be to change the legal framework of ongoing contracts. However, this should necessarily be justified by a sufficient reason of public interest. This could involve the possibility for banking institutions to modify the terms of the old ELP by agreeing to contribute to strengthening the global economic model of regulated savings and increasing its use towards priority investments (ecological transition and energy …). This could also entail the application of a specific rate of remuneration for overdue ELPs (i.e. those which have reached the contractual duration but which the depositor has not requested withdrawal from).