PER and Survivor Benefits: Protecting Your Spouse and Tax Rules

The PER as a tool for spousal protection

The question of survivor benefits (reversion) is central to retirement planning. What happens to your spouse if you die? Survivor pensions from mandatory schemes provide a minimum, but they are often insufficient to maintain the surviving spouse's standard of living. The PER offers powerful complementary mechanisms to protect your spouse, both during the savings phase (beneficiary clause) and in the retirement phase (annuity reversion).

Income loss upon a spouse's death is a major wealth issue that too few couples anticipate. Yet the figures are telling: according to DREES, widows' standard of living falls by an average of 20% after their spouse's death. A properly configured PER can considerably soften this drop.

Reversion in mandatory schemes: a reminder

The survivor pension from the regime general represents 54% of the deceased spouse's pension, subject to means testing (cap of 24,232 euros annually in 2026 for a single person, approximately 2,019 euros per month). For civil servants (fonctionnaires), reversion is 50% with no means test, but with a condition on marriage duration or children from the union. In supplementary schemes (AGIRC-ARRCO), reversion is 60% with no means test.

Protection during the savings phase: death before retirement

The PER beneficiary clause

Like life insurance, the PER assurance allows designation of beneficiaries in case of death. The beneficiary clause determines who will receive the accumulated capital if the holder dies before claiming their rights. It is a powerful estate-planning tool that operates outside the standard inheritance process.

Standard clause: "My spouse or PACS partner, failing whom my children born or to be born, living or represented, in equal shares, failing whom my heirs."

This clause can and should be customized to address complex family situations: blended families, children from a first marriage, financially vulnerable spouse, etc.

Note about bank-based PERs: If your PER is a securities account PER (PER compte-titres, as opposed to an insurance-based PER), it does not benefit from the life insurance tax regime in case of death. The capital enters the standard inheritance process. Contracts such as Linxea Spirit PER, PER Placement-direct and PER Yomoni are insurance-based PERs and thus benefit from this favorable regime.

Taxation in case of death before 70

If the insurance-based PER holder dies before 70, the transmitted capital benefits from the article 990 I CGI regime (same as life insurance):

• 152,500 euros allowance per beneficiary
• 20% tax between 152,500 and 852,500 euros per beneficiary
• 31.25% tax above 852,500 euros

Essential point: The married spouse or PACS partner is fully exempt from inheritance tax and the specific tax on death capital. They will receive the entire capital with no taxation whatsoever. This is a major advantage of the insurance-based PER over the bank-based PER.

Worked example: Marc dies at 58 with a PER of 400,000 euros. His wife Isabelle is the sole beneficiary. As a married spouse, she is exempt from all taxation. She receives 400,000 euros net. If the beneficiary had been a child, after the 152,500 euros allowance, the taxable base would have been 247,500 euros, resulting in a tax of 49,500 euros (20%).

Taxation in case of death after 70

If the holder dies after 70 (and before pension liquidation, which is rare but possible), the regime changes. Premiums paid after 70 fall under article 757 B of the CGI:

• Global allowance of 30,500 euros (shared among all beneficiaries)
• Beyond that, subject to inheritance tax based on the family relationship
• The married spouse or PACS partner remains fully exempt (this is a general inheritance rule)
• Capital gains are not taxed within this framework

In practice, this case is uncommon as most PER holders liquidate their rights before 70. It mainly concerns PERs taken out late or individuals who deliberately delay pension liquidation.

Protection in the retirement phase: the reversion annuity

How PER reversion works

When the PER holder opts for a life annuity exit, they can choose a reversion option at the time of liquidation. This choice is final and cannot be modified subsequently. In the event of the holder's death, the reversion beneficiary (usually the spouse) continues to receive a fraction of the annuity, for life.

Available reversion rates are generally:

• 50%: the beneficiary receives half of the initial annuity. Moderate reduction of the holder's annuity.
• 60%: the most common rate, a good balance between spousal protection and the holder's annuity amount.
• 100%: maximum protection, but a significant reduction in the initial annuity (25 to 35% less than a simple annuity).

Impact on the annuity amount

The reversion option reduces the holder's annuity because the insurer must provision for the risk of paying the annuity for a longer period (two lives instead of one). The age and sex of the reversion beneficiary directly influence the reduction amount.

The difference between a no-reversion annuity and a 60% reversion annuity is approximately 1,600 euros per year, or 133 euros per month. This is the "price" of spousal protection. While often perceived as high, it must be put in perspective: if the holder dies after 10 years of annuity, the spouse will potentially receive 5,040 euros per year for 15 to 20 years, i.e. 75,600 to 100,800 euros total. The reversion "return on investment" is thus considerable if the spouse lives long.

Taxation of the reversion annuity

The reversion annuity received by the surviving spouse is taxed under the same regime as the original annuity:

• If contributions were deducted: pension regime (progressive scale after 10% allowance)
• If contributions were not deducted: RVTO regime (life annuity for valuable consideration, taxable fraction based on the beneficiary's age when they start receiving the reversion)

The surviving spouse benefits from the 10% pension allowance, which adds to the allowance on their own retirement and mandatory reversion pensions. However, the 10% allowance is capped at 4,321 euros per household in 2026.

Guaranteed annuities: an alternative to reversion

The mechanism

Rather than opting for reversion, the holder can choose guaranteed annuities. The insurer commits to paying the annuity for a minimum period (10, 15 or 20 years), even in case of the holder's early death. If the holder dies before the end of the guaranteed period, the designated beneficiaries receive the remaining annuities.

Example: Paul, 64, opts for a 10,000 euros/year annuity with 15-year guaranteed annuities. He dies at 72 (after 8 years of payments). His beneficiaries (who can be his children, not necessarily his spouse) will receive 7 more years of annuity, totalling approximately 70,000 euros.

The taxation of guaranteed annuities paid to beneficiaries depends on the family relationship and the annuity's tax regime. As a general rule, annuities are taxed in the beneficiaries' hands under the same regime as the holder's annuity.

Reversion or guaranteed annuities?

Guaranteed annuities are better suited if:

• The beneficiary is a child or relative (not necessarily the spouse)
• The holder is in poorer health and fears an early death in the first annuity years
• The annuity amount is modest (reversion on a small annuity provides little protection)

Reversion is preferable if:

• The spouse has a long life expectancy (e.g. a woman 10 years younger)
• The spouse depends heavily on this supplementary income to maintain their standard of living
• The holder is in good health and is likely to live beyond the guaranteed period (in which case guaranteed annuities would no longer protect anyone after the period ends)

Combined protection strategies

Combining PER and life insurance

The PER offers protection during the savings phase (beneficiary clause) and during the annuity phase (reversion). But life insurance effectively complements this protection by providing immediate liquidity to the surviving spouse. A life insurance capital allows them to meet urgent expenses (funeral costs, maintaining living standards in the first months) while waiting for the reversion to be set up.

The optimal strategy for a couple is to:

1. PER with reversion to secure a lifetime supplementary income for the surviving spouse
2. Life insurance with beneficiary clause in favor of the spouse to build an immediately available precautionary capital
3. Temporary death insurance during the accumulation phase (if the surviving spouse's income would be insufficient before PER liquidation)

Tailoring the beneficiary clause to family situations

Blended family: You can designate your new spouse as the primary beneficiary and provide for distribution among children from a first marriage and shared children. Example clause: "My spouse for 60%, my children from a first union for 20%, our shared children for 20%, failing whom my heirs."

Spouse with low income: Maximize protection: 100% reversion, full beneficiary clause in favor of the spouse, targeted supplementary life insurance. The additional cost of 100% reversion (approximately 2,800 euros/year for a 250,000 euro capital) is justified by the spouse's financial vulnerability.

Couple without children: The PER is an essential tool for protecting the surviving spouse, as the absence of forced heirs (heritiers reservataires) offers greater freedom in wealth distribution. You can allocate 100% of the PER capital to the spouse without constraint.

Unmarried and non-PACS couple: Be aware that cohabitation (concubinage) gives no right to any mandatory scheme reversion. PER protection is therefore all the more important. However, the cohabiting partner beneficiary of the PER does not benefit from the death tax exemption reserved for married or PACS partners. Entering into a PACS can be a simple solution to gain this exemption.

Pitfalls to avoid

Forgetting to update the beneficiary clause

In case of divorce and remarriage, your former spouse may remain the beneficiary of your PER if you have not modified the clause. PER contracts such as Linxea Spirit PER or PER Placement-direct allow modifying the beneficiary clause online in a few clicks. Systematically check and update your beneficiary clause whenever your family situation changes: marriage, divorce, PACS, birth, death.

Choosing reversion without assessing the actual need

If your spouse has substantial personal income and sufficient mandatory scheme reversion pensions, PER reversion may be superfluous. In this case, a higher no-reversion annuity or guaranteed annuities with a different beneficiary (children) may be more appropriate. Run the precise numbers on the surviving spouse's income before deciding.

Neglecting the tax impact for the surviving spouse

The reversion annuity is added to the surviving spouse's income, who shifts from couple taxation (2-share family quotient) to single-person taxation (1 or 1.5 shares). The combined effect can be significant on tax. For example, a 6,000 euros/year reversion taxed at the surviving spouse's 30% marginal rate yields only 4,200 euros net. If contributions were not deducted, the reversion would be taxed under the RVTO regime (only 40% taxable for a 60-69 year-old beneficiary), resulting in significantly lighter taxation.

Choosing reversion without comparing contracts

Conversion rates and reversion conditions vary significantly from one PER contract to another. Before liquidating your PER as an annuity, compare at least three offers. The reversion rate, the mortality tables used (TGH05/TGF05 for men/women) and the annuity servicing fees (frais d'arrerage, generally 0 to 3%) are the determining criteria.

Forgetting death insurance during the accumulation phase

The PER only pays capital to beneficiaries upon the holder's death. But if the holder dies young, the accumulated capital may be modest. A term life insurance policy (assurance temporaire deces) is an essential complement to guarantee a minimum capital for the spouse, especially in the early years of PER accumulation.

Mixed withdrawal: an optimal protection strategy

For many couples, the best strategy is to combine a partial lump sum withdrawal and an annuity with reversion:

1. Withdraw a portion as a lump sum (e.g. 40%) to repay a loan, finance projects or build a precautionary capital for the spouse in a life insurance policy
2. Convert the rest into an annuity with 60% reversion to secure a lifetime supplementary income for both spouses

This approach provides both immediate liquidity and long-term protection. It also allows diversifying taxation: one portion taxed as a lump sum (PFU on gains) and another taxed as an annuity (pension or RVTO regime).

Conclusion

The PER offers powerful tools for spousal protection, but they require informed, advance decisions. The beneficiary clause during the savings phase and the reversion option during the annuity phase are the two pillars of this protection. Take the time to simulate different scenarios with your wealth advisor to find the optimal balance between personal annuity amount and surviving spouse protection. Do not wait until the eve of retirement to think about this: updating the beneficiary clause, choosing the right PER contract (Linxea Spirit PER, PER Placement-direct, PER Yomoni) and coordinating with life insurance are decisions best prepared well in advance.