Introduction to Home Savings Accounts PEL and CEL

The Central Bank of France has regulated a special category of home savings account in the form of PEL (Plan Epargne Logement). This plan gives the benefit of saving money for building/ purchasing a home. Following are some of the important aspects of PEL.

Phases and Key Elements of PEL

Opening:

• Minimum payment when opening a PEL is 225 €.
• PEL should be in EUR currency only and it can be opened in any branch.

Deposits and withdrawal:

• It is mandatory to have regular payments for PEL upto 4 years. The permitted frequency and amount is given below:
  • Monthly: EUR 45
  • Quarterly: EUR 135
  • Half-yearly: EUR 270
  • Yearly: EUR 540
• Regular deposits after 4 years of opening is optional.
• If there is no instruction from customer, the regular deposit will be extended each year up to the 10th year.
• Maximum deposit allowed for PEL during its lifetime is EUR 61200.
• Regular or ad hoc deposits can be made into PEL only up to 10 years from date of opening.
• If ad hoc deposit is made within 4 years, system should ensure that the current ad hoc deposit amount made + previous ad hoc deposits made + regular amount scheduled for 4 years should not exceed EUR 61200.
• If ad hoc deposit is made after 4 years, system should ensure that current ad hoc deposit amount + total previous deposits made (ad hoc amd regular) does not exceed EUR 61200.
• No withdrawal is allowed for PEL.

Loan and bonus:

• It’s a pre-requisite that PEL has to be closed for taking a loan.
• Loan has to be taken within 1 year of PEL closure.
• Only one loan can be taken for a PEL.
• The bonuses for a PEL is paid either when receiving the loan or at the time of closure, depending on the opening date of PEL.
• Loan rights are calculated based on the gross capitalized interest as of last birth date of PEL or Maturity date (regular payment end date), whichever is earlier.
• The maximum bonus for PEL is EUR 1525. The maximum loan amount is EUR 92000.
• No bonus is paid if PEL is pre-closed less than 2 years of opening.
• Half of the bonus is paid if it is closed 3-4 years of opening.
• Full eligible bonus is paid if it is closed greater than 4 years of opening.
• For PEL opened after 1st March 2011, if customer is going for energy efficient home, then eligible max bonus is EUR 1525. If non-energy home, then it is EUR 1000.
• Extra bonus is given based on the number of dependents. Its calculated as Actual bonus * 10% * Number of dependents.
• Once the bonus is paid to customer, the bonus has to be claimed back from Banque de France. Message 030 is been sent to them for this purpose. This is a fixed length file.
• If there is any rejections in 030 message, Banque de France will respond back with 430 message with the rejection code.

Closure:

• If PEL is closed within 2 years, then the interest should be recalculated from date of opening at CEL rate.
• In the first 4 years, on every birth date of PEL, system to check if there is deposits made for EUR 540 for the previous year. If no, then PEL should be closed.
• For PEL opened on or after 01/03/2011, if there is no deposit made after 4 years of opening PEL, then it will be auto closed.
• For PEL opened before 01/03/2011, there is no auto closure.

Tax:

• Tax is applied only for residents of France.
• Below taxes are applicable on interest and bonus:
  • CRDS
  • CSG
  • PS
  • CAPS
  • PDS
  • PFONL (From 12th year onwards. This tax is not applicable for bonus)
• For PEL opened before 01/03/2011, tax is calculated until 10th year but not posted. The accounting is posted only at the end of 10th year capitalization. From 11th year onwards, it is posted every year end.
• For PEL opened on or after 01/03/2011, tax is posted every end during capitalization.

Transfer-in:

• A PEL can be opened either by manual application (subscription) or by transfer reception (transfer-in).
• During transfer-in, the balance of PEL in old Bank is transferred to the newly opened PEL. The accrued interest (from 1/1/current year to last accrual date in other bank) is also transferred. But this amount should be maintained in a payable account and should be credited to PEL in the next capitalization date.
• For transferred in PEL, which is opened between 01/01/1981 to 31/07/2003, the bonus is included in the interest.
• For transferred in PEL, which is opened between 12/12/2002 to 31/07/2003, the bonus is paid at the time of taking loan.
• For transferred in PEL, which is opened between 01/01/1981 to 11/12/2002, the bonus is paid at the time of closing PEL.

Transfer-out:

• PEL can be transferred out to another bank. At the time of transfer out, actually the PEL will be closed and the balance of PEL is transferred to other bank.
• An advice will be generated which contains details of PEL.

Inheritance and donation:

• PEL can be inherited from family members. A customer is allowed to have a PEL of his own and an inherited PEL. Therefore a customer can hold two PELs in this case.
• PEL can be received via donation. In such cases donated PEL has to be closed and new PEL has to be created.

Reports:

• The below reports are produced at the mentioned frequency:
  • List of PEL with auto-renewal option maturing in 21 days (Daily).
  • List of PEL with auto/ manual renewal option maturing in 30 days (Daily).
  • PELs with insufficient annual payment.
  • List of bonus and extra bonus to be recovered from BDF (Daily).
  • Home Savings statistics (Quarterly).
  • Tax levies (Monthly).
  • Supporting statement of re-discount (Monthly).
  • Summary of bank re-discount (Monthly).

CEL Overview

The Home Savings Account (CEL) is a savings product, which can be used to obtain a home loan at a preferential rate. Interest is exempt from income tax but subject to social security contributions (other taxes).

When the rights acquired during the life of a CEL are effectively used to obtain a real estate loan, a bonus is paid by the State, through Crédit Foncier de France (National mortgage department, Bank de France).

Key elements of a CEL:

• Minimum payment when opening a PEL is 300 €.
• A minimum mandatory payment/ withdrawal of 75 € per transaction is required.
• The bonuses for a CEL are always payable when receiving the loan.
• A regular payment can be proposed but is not mandatory.
• Total balance of a CEL (including acquired interest) must not exceed 15.300 €, meaning that after this limit is reached there cannot be more payments.
• Partial withdrawal is possible but cannot be less than 75 € per transaction.
• CEL account must always have a minimum balance of 300 €, otherwise the account is closed.
• The loan rights can be used after 18 months from the opening of CEL or within 10 years from the date of closure of CEL.
• There can be multiple loans based on a CEL account during its lifetime.
• A CEL can be opened either by Manual application (subscription) or by transfer reception (transfer acknowledgement).
• The below reports are produced at the mentioned frequency:
  • Home Savings statistics (Quarterly).
  • Tax levies (Monthly).
  • Supporting statement of rediscount (Monthly).
  • Summary of bank rediscount (Monthly).