New French bank savings account for under-21s: rules and interest rate
The PEAC account is designed for parents to set aside long-term savings for their children, and to fund environmental projects
The government's aim for PEAC accounts is to encourage parents to set aside long-term savings for their children and to fund eco-friendly projects
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A new type of state-regulated bank account for under-21s is set to launch in France. We look at the conditions for this, including the cap on the amount allowed and interest rate.
The bank account, called le plan d’épargne avenir climat (PEAC), will be available from July 1.
It was first announced by Finance Minister Bruno Le Maire in May 2023, and will come into force following two decrees published on June 16 in the Journal Officiel.
What is a PEAC for?
The government's aim is to encourage parents to set aside long-term savings for their children.
The accounts will also help to fund low-carbon, environmentally-friendly projects, within the scope of the ‘green industry’ law that was voted for in October 2023.
Who can open an account?
To open and/or hold the account, you must:
Be aged 18 to 21, to open your own account.
Be opening the account for your child, if they are under 18. Parents can open an account for their child from birth.
Be resident in France.
Not have another PEAC account (either for yourself or the same child). Only one PEAC is allowed per person.
You can open a PEAC with a bank or management company, and it operates as a savings account into which amounts can be deposited.
Is there a savings limit for a PEAC?
Yes. The limit for savings in a PEAC is €22,950.
What is the interest rate on a PEAC?
Unlike other regulated savings accounts (Livret A, LDDS, LEP, etc.), interest rates on the PEAC will not be set by public authorities.
However, in May 2023, Mr Le Maire estimated that the interest rate would "undoubtedly be more attractive than that of the Livret A". The Livret A currently has an interest rate of 3%.
An impact study suggests that the average annual return could reach 5%.
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When can you access the savings in a PEAC?
The money will not be available for withdrawal until the holder reaches the age of majority.
The exceptions are:
From the age of 18, the account holder may make withdrawals without closing the plan, but they must have had the account for five years to do so.
If the holder makes a withdrawal, they will no longer be able to deposit further savings into the account.
How long does the account last?
The plan will be automatically closed on December 31 of the year in which the holder turns 30.
The sums will then be released for payment into the holder's specified account.
Are your savings at risk in a PEAC?
As with all regulated savings accounts in France (e.g. Livret A, LEP, etc.), your funds are not 100% secure. However, the risk is much lower than in other types of savings accounts.
The risk decreases the closer the account comes to being closed (December 31 of the year in which the holder turns 30, or another date requested by the holder).
The law states that two years before the policyholder's intended liquidation date, at least 70% of the assets must be invested in low-risk products.
Article L. 221-34-3 of the Code monétaire et financier states: "Unless the holder expressly decides otherwise, payments into a plan d'épargne avenir climat (PEAC) are allocated in a way that provides sufficient protection for the savings invested and gradually reduces the financial risks for the holder.”
Is the PEAC subject to tax?
No. In the same way as other regulated savings products, interest in a PEAC is exempt from income tax and social security contributions.
However, if the PEAC is closed for non-compliance with the operating conditions, the gains will be taxable.
What projects will the PEAC money fund?
The money will be allocated to financial funds that contribute to financing the ecological transition… with a low level of risk, the law states.
The fund issuers will be “based in France, in another Member State of the European Union, or in another State party to the Agreement on the European Economic Area that has signed an administrative assistance agreement with France to combat tax fraud and evasion”, states Article 34 of the Green Industry Act.
The sums must be invested in funds with the ISR (investissement socialement responsable, socially responsible investment) label or the France finance verte label.
