The Livret A is the preferred savings investment of the French. In the last year, the regular revaluation of its rate has further promoted its popularity with the 55 million people who hold such a booklet. As a reminder, since February 1, the Livret A pays 3% net on all funds, up to a limit of 22,950 euros per savings account.
Strongly anchored in the daily life of the French, the Livret A totally eclipses the People’s Savings Book (LEP) which is nevertheless accessible to 18.6 million people in France according to figures from the tax authorities. Founded in 1982, it is intended for people with modest incomes and provides a higher return than the Livret A.
A guaranteed investment at 6.1% net
If it pays twice as much as a Livret A, the LEP lacks visibility. Only 8.5 million French people hold a popular savings account, ie around 45% of eligible people. It is especially unknown among 18-25 year olds, who would only be 1% to hold it according to the 2022 report of the association Consumption housing environment.
To access a return of 6.1% net, you must meet income conditions – unlike the Livret A. In this case, “the reference tax income N-2 or N-1, indicated on your notice of taxation must not exceed a certain threshold” explains the Banque de France. This threshold also depends on your family composition (family quotient) and your place of residence (mainland vs overseas).
Pour be able to open a LEP in 2023, your N-2 (or N-1) reference tax income must not exceed the thresholds below if you live in Metropolitan France. If you live overseas, the thresholds are higher. Each year, your bank will ask you for a tax notice to check that you still meet the income criteria.
Maximum tax income threshold to hold a LEP in 2023 © Banque de France
For example, if you are single without children, your tax income must not exceed 21,393 euros for the year 2022 to benefit from the LEP in 2023. In the case of a couple with a minor child, the tax income of the household must not exceed 38,530 euros in 2022 to be entitled to claim a popular savings account.
The only passbook guaranteed at a rate higher than inflation
If the Livret A remunerates 3% net, it is always necessary to take account of inflation which comes to penalize the cost of living of the French. While consumer prices still grew by +5.4% last March, the real yield on Livret A remains negative. The same observation applies to other investments guaranteed by the State such as the LDDS for example.
However, the LEP is an exception since it is the only risk-free savings account, with a rate higher than inflation. Over the last year, the yield of the latter has literally exploded, going from 1% in January 2022 to 4.6% in August 2022, then to 6.1% in February 2023. Apart from the ceiling, the yield and the conditions of eligibility, it incorporates all the characteristics of the Livret A: calculation of interest every fortnight, not subject to tax and social security contributions, free and cost-free withdrawals, risk-free capital, etc.
