June 19, 2024


Built General Tough

“The Livret A brings nothing more”

“The Livret A brings nothing back! »: Here is a phrase that we have heard often in recent years. Stuck at 0.50% since the start of the year, the real return on the regulated savings book, corrected for inflation, has indeed fallen into negative territory. But has he lost all interest for all that?

0.50%. This is the annual interest rate served by the Livret A since February 1, a historic low. And it could be even worse. With regard to the new calculation formula, it should have been reduced to 0% on August 1, except that the regulations set a minimum threshold: 0.50% therefore. With consumer prices up 0.80% over one year in July in France, according to the latest figures from Insee, the real return on the most popular savings product in France (55 million accounts opened) is in negative territory. In other words, the Livret A earns you less than inflation, and it therefore does not completely protect your purchasing power.

With its net tax rate of 0.50%, has the Livret A therefore lost all interest? To answer this question, you have to observe it in its general environment. And realize that no product escapes the low interest rate environment.

Bank passbooks do not earn anything or almost nothing

Not the bank books for example, which share certain characteristics of the Livret A, in particular security (guaranteed rates and funds) and flexibility (funds available at any time). According to our rate indicator for bank books, the average remuneration of tax-based savings accounts at market rate is 0.07% in August, i.e. 0.054% net only net of single flat-rate deduction (PFU) at 30%. A rate much lower than the remuneration of the Livret A. Some products retain a minimum of attractiveness, such as the Livret Distingo from PSA Banque, which then shows a return of 0.80%, or 0.56%, net of PFU.

To find better, we must therefore fall back on more restrictive or riskier products. And even. At 1% gross, ie 0.70% net of PFU, the new Housing Savings Plans (PEL) are above the Livret A, but with payment constraints and the impossibility of making partial withdrawals. This observation only applies to plans open since January 1, 2018. The lucky ones holding older generation PELs continue to benefit from more attractive rates : 2.63% on average in July according to the Banque de France.

Hard time for life insurance

As for life insurance, the drop in returns of funds in euros, with guaranteed capital, continues with 1.33%, net of management fees (but before tax), on average in 2019, and 1% expected in 2020. Not to mention that insurers are pushing their customers towards unit-linked, more risky, and now offer euro funds without the 100% guarantee of the paid-up capital, like the revolution operated by Spirica.

There is also the popular savings account (LEP) with a return of 1% net of tax. Except that it operates much more restrictively than that of the Livret A. Only tax households with a reference tax income of less than 19,977 euros (for one person) can benefit from it for example. As a result, you have to present your tax notice to your banker every year, to open a LEP or keep it open.

The protective role of the Livret A

In the end, the Livret A, if it no longer protects against inflation, still plays a protective role. Over the first six months of the year, the cumulative collection on this savings product amounted to 20.41 billion euros against 11.57 billion euros a year earlier. Despite the lowest level of remuneration, the Livret A has become a safe haven for savers since the start of the crisis triggered by Covid-19.

Read also: Where does the money for your Livret A go?

“The French know that the economic context is catastrophic, that there are risks of dismissal and that there will be no salary increase,” explains Cyrille Chartier-Kastler, president of the research firm Facts & Figures . As life insurers do not want to garner net inflows on their funds in euros in the current configuration of the financial markets, there is therefore a significant shift from the collection of secure savings to regulated bank savings “, such as the A booklet.