Xavier Collot
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Opinion: Life Insurance and PER – Preparing for Retirement with an Aggressive Profile

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By Xavier Collot – Managing Director, Listed and Hybrid Assets, Sienna IM for Le Revenu

How to manage your wealth in preparation for retirement?

This question is all the more crucial as few savers believe that their future pension, coming from the pay-as-you-go system, will be sufficient to meet their financial needs once they leave their professional life behind.

This reality calls for the implementation of a long-term wealth strategy that is accessible, understandable, capable of enhancing your capital, and protecting it against inflation.

Diversified Allocation

A long-term wealth strategy can no longer be considered without a diversified allocation that includes a significant portion of non-listed assets, a trend encouraged by regulation.

Since the entry into force of the Green Industry Law on October 24, 2024, any saver subscribing to a managed contract under a life insurance policy or a retirement savings plan (PER) is now required to hold a minimum percentage of non-listed assets, with the threshold varying according to the chosen risk profile and the investment horizon before the planned liquidation date.

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With the introduction of a new aggressive profile in PERs, you will have the opportunity to benefit from an allocation with a higher share of non-listed assets compared to more traditional, conservative profiles.

This is great news for younger savers, who have several decades ahead before retirement, as exposure to private assets,whether through private equity or private debt, is a suitable way to seek long-term returns, generally uncorrelated with short-term financial market performance.

Moreover, the retirement savings framework is well-suited to making private assets accessible to a broader audience, particularly younger investors, who are more receptive to these themes and willing to take on higher risk.

The younger you are, the more it makes sense to take higher risks to maximize your long-term returns.

Rise of Non-Listed Assets

By the end of 2024, there were 25 French-law evergreen venture capital funds (FCPR) accessible to non-professional investors.

These non-listed investment funds are designed to operate without a fixed term, whereas traditional private equity vehicles have a predetermined maturity.

Last year, evergreen funds represented 65% of the total assets of non-listed funds available to the general public, with an average annual return of 5.8%, up from the previous year, according to France Invest.

Although the share of non-listed assets in France remains lower than in the United States, retail investors could account for 15–20% of private asset fundraising within five years, compared to less than 5% today.

Key Figure


25

This is the number of French-law evergreen venture capital funds (FCPR)—i.e., without a predetermined maturity—accessible to non-professional investors at the end of 2024.

New Expectations from Savers

When it comes to long-term savings, it is essential to determine your investment profile based on your capacity to take risk over a known time horizon.

The younger you are, the more it makes sense to take higher risks to maximize your long-term returns.

As you age and approach your investment horizon, it is advisable to reduce your portfolio’s exposure to assets considered riskier.

In this context, having a new investment grid corresponding to an aggressive profile should allow young savers with low risk aversion and a long investment horizon to achieve greater diversification and maximize long-term portfolio returns.

Offering only the three standard profiles (conservative, balanced, dynamic), regardless of the investor’s age or investment horizon, no longer met savers’ expectations given the investment opportunities now available to everyone.

An SRI Rating to Measure a Fund’s Risk Level

All financial products available for subscription come with a Synthetic Risk Indicator (SRI).

This rating assesses the product’s risk level on a scale from 1 to 7 and is included in the Key Information Document (KID).

Since January 1, 2023, the SRI has replaced the former SRRI (Synthetic Risk and Reward Indicator). The closer the rating is to 7, the riskier the fund is considered, and the higher the likelihood that the issuer might default and fail to repay.

Change in the Scale

The SRI also accounts for the risk of performance decline based on market fluctuations.

This information helps investors make informed decisions but does not guarantee the product’s risk level.

Even if a fund is theoretically low-risk, an SRI score of 1 does not mean that the fund’s assets are guaranteed. With the Green Industry Law, the definition of low-risk assets has changed.

Low-risk assets must now have an SRI score of 2 or below in PER management grids. Previously, low-risk assets could have an SRI score of 3 or below.

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