FRPS: All About Supplementary Professional Retirement Funds

In Summary

📌 Section	📝 Description
🔎 What is an FRPS?	An FRPS is a legal entity dedicated to managing supplementary pension commitments, distinct from traditional insurance products.
🛠️ Why were FRPS created?	Created in 2016, FRPS offer better management of retirement liabilities with more flexibility and increased security.
📜 A regulatory framework more flexible than Solvency II	FRPS benefit from a less restrictive framework than Solvency II, allowing them to optimize their investments.
📈 A need for securing retirement commitments	FRPS ensure stable pension management despite increased life expectancy and market volatility.
🏦 A solution for large insurance groups	Actors such as AG2R La Mondiale and Generali have structured FRPS to better manage their retirement contracts.
📜 The regulatory framework of FRPS	FRPS are supervised by the ACPR and must comply with the IORP II Directive, ensuring transparency and solvency.
📊 Differences between an FRPS and a traditional retirement insurance	FRPS offer greater investment freedom than conventional insurances, with better profit redistribution.
🏛️ Examples of companies adopting an FRPS	Many insurers like Swiss Life, Crédit Agricole Assurances, and Agrica have adopted FRPS.
💡 What are the advantages of an FRPS?	FRPS guarantee optimized management, improved returns, and enhanced protection for savers.
🔄 Impact on your retirement savings contract	Guarantees remain the same, but management becomes more efficient with better profit sharing.
💰 How is the taxation of FRPS structured?	Savers benefit from tax advantages on contributions, and companies enjoy exemptions.
🌍 FRPS and responsible investing	FRPS incorporate ESG criteria, promoting sustainable and ethical investments.
📢 What challenges do FRPS face?	FRPS must adapt to regulation, improve information for policyholders, and maintain profitability.
🔮 The future of FRPS in France	With increasing adoption and effective management, FRPS are set for substantial growth.

The Supplementary Professional Retirement Funds (FRPS) are structures dedicated to managing additional retirement commitments in France. Created to meet European standards, they enable insurers to optimize fund management while ensuring greater security for beneficiaries.

🔎 What is an FRPS?

A Supplementary Professional Retirement Fund (FRPS) is a distinct legal entity, specifically created to manage additional retirement commitments of insurance companies. These funds aim to secure savings while offering a regulatory framework that is more flexible and better suited for long-term investments.

🔍 An independent legal entity

Unlike standard insurances, which manage various contract types (life insurance, provident schemes, financial investments, etc.), an FRPS focuses exclusively on supplementary professional retirement contracts. This separation allows for optimized financial management and better control of long-term liabilities.

FRPS must obtain approval from the accredited by the ACPR (Prudential Supervision and Resolution Authority), which oversees their financial strength and beneficiary protection. They are subject to specific regulatory requirements, particularly regarding solvency and investment governance.

📌 A management approach better suited for retirement commitments

Supplementary retirement contracts require long-term investments to ensure pension or lump-sum benefits for beneficiaries upon their retirement. An FRPS allows insurers to invest more freely in diversified assets such as:

• Real estate (offices, housing, infrastructure),
• Equities (listed and unlisted companies),
• Government or corporate bonds,
• Alternative funds (private equity, private debt funds).

Thanks to this diversification, FRPS can optimize returns while maintaining a controlled risk level.

🛠️ Why were FRPS created?

The Supplementary Professional Retirement Funds (FRPS) were established in 2016 to address market developments in retirement and increased regulatory constraints faced by insurers. Before their creation, additional retirement liabilities were integrated into other activities of insurance companies, complicating financial management and solvency. The main goal of FRPS was thus to clearly separate retirement liabilities management from other insurance activities to provide more security to beneficiaries.

Thanks to this reform, insurers now benefit from a more adapted framework for managing long-term commitments, enabling them to optimize financial investments while ensuring greater stability for policyholders.

📜 A regulatory framework more flexible than Solvency II

Why was Solvency II problematic?

Before the creation of FRPS, additional retirement contracts were subject to Solvency II regulation, which imposed strict financial constraints on insurers. This regulation required companies to hold substantial capital reserves, limiting their investment capacity. The result? Less flexible management and lower returns for beneficiaries.

Advantages of the FRPS framework

With the implementation of FRPS, insurers benefit from a new legal framework inspired by the IORP II Directive, which offers various advantages:

• Reduced capital requirements, allowing insurers to allocate more resources to investments.
• Greater management flexibility, encouraging strategies more dynamic investments.
• Optimized returns for policyholders, thanks to better-suited long-term investments.

This framework thus allows insurers to have more flexibility, while ensuring policyholders a more stable and efficient management of their retirement savings.

📈 A need for securing retirement commitments

A complex economic and demographic context

Pension funds must ensure that capital will be available for future retirees. However, several factors make this mission more difficult:

• Longer life expectancy, increasing the duration during which retirees receive pensions.
• Market volatility, which can weaken long-term investments.
• Budget constraints of states, which reduce public aid to pension schemes.

How do FRPS provide a solution?

FRPS allow for secure management of retirement commitments by offering: ✅ Better control of liabilities, since the funds are exclusively dedicated to supplementary retirement.
✅ Better-aligned investments with long-term needs, promoting higher-yield placements.
✅ Enhanced protection for beneficiaries, as the returns generated by the fund are exclusively redistributed to members.

Thus, FRPS ensure financial sustainability of retirement systems while guaranteeing a greater stability for beneficiaries.

🏦 A solution for large insurance groups

Why have insurers adopted FRPS?

Since their implementation, many insurance groups have decided to use FRPS to better structure their commitments and optimize their profitability. This solution allows them to:

• Reduce the impact of Solvency II requirements, which lightens their financial management.
• Improve investment performance, by favoring more long-term strategies.
• Offer better guarantees to policyholders, by ensuring a clear separation of retirement liabilities and other activities.

Major players who have adopted an FRPS

Many groups have already implemented their own FRPS:

• AG2R La Mondiale → La Mondiale Retirement Supplementary
• Generali France → Generali Retirement
• Swiss Life and Agrica, which obtained ACPR approval
• Crédit Agricole Assurances, which set up an FRPS for its retirement activities.

Thanks to these FRPS, insurers can better manage their commitments and offer more efficient retirement products, while providing depositors with enhanced security.

📜 The regulatory framework of FRPS

The Supplementary Professional Retirement Funds (FRPS) are strictly regulated by the Insurance Code, notably in Title VIII (Articles L381-1 to L385-10). This legal framework was designed to ensure stability and financial security of supplementary pensions, while offering insurers greater flexibility in asset management.

📖 The main rules governing FRPS

FRPS must comply with several regulatory requirements, including:

📌 1. Compliance with European standards (IORP II Directive)

FRPS align with the IORP II Directive, which aims to harmonize the management of occupational pensions within the European Union. This directive requires:

• Enhanced governance, with strict requirements on risk and asset management.
• Increased transparency, requiring FRPS to publish detailed reports on their financial situation.
• Protection of beneficiaries, ensuring retirement savings are secure and well-managed.

By adopting this European framework, France enables insurers and financial institutions to better structure their commitments in supplementary pensions.

📌 2. Mandatory approval from the ACPR

Before operating, an FRPS must obtain approval from the Prudential Supervision and Resolution Authority (ACPR). This independent authority, under the supervision of the Bank of France, ensures:

• Financial solidity, before the launch of FRPS.
• Compliance with governance rules, especially in risk management.
• Strict application of regulatory obligations, to protect beneficiaries.

ACPR regularly monitors FRPS to ensure they comply with prudential standards and have the necessary funds to meet their liabilities.

📌 3. Specific solvency obligations

FRPS must follow appropriate prudential rules, which are between those of standard insurance (Solvency II) and European pension funds (IORP II). Their solvency obligations include:

• A sufficient capital requirement to cover ongoing liabilities.
• Annual stress testing, to evaluate their capacity to withstand economic shocks.
• Prudent asset management, based on the prudent person rule, avoiding excessive risks.

These requirements ensure that pensions and annuities promised to policyholders will be honored long-term.

📊 Summary table of regulatory obligations for FRPS

📜 Requirement	⚖️ Description
📖 IORP II Directive	European harmonization of retirement management
✅ ACPR approval	Verification of financial strength and compliance with prudential rules
💰 Solvency requirements	Maintaining a sufficient level of own funds to guarantee retirements
🔍 Annual stress test	Assessment of financial risks and capacity to absorb economic shocks
🔐 Beneficiary protection	Ensuring transparency and good management of savings

📊 Differences between an FRPS and a traditional retirement insurance

The Supplementary Professional Retirement Funds (FRPS) and standard retirement contracts are two distinct solutions, governed by different regulatory frameworks. While classic life insurance offers a generalist approach to savings, FRPS are specifically designed for managing additional occupational retirements.

📌 Detailed comparison of FRPS and traditional insurances

Criteria	FRPS	Standard Life Insurance
🏛️ Supervision	Regulated by ACPR and subject to the IORP II Directive	Regulated by Solvency II, which imposes stricter capital requirements
📈 Asset management	More flexible, with an investment strategy focused on long term	More cautious strategy, due to stricter solvency constraints
💼 Recipients	Dedicated to additional retirement contracts (Madelin, PER, company collective schemes)	Covered by life insurance, savings, and other financial products
🔄 Risk approach	Optimization of investments for better long-term returns	Limited exposure to risks, with secure investment strategies
🔍 Participation in profits	100 % of generated profits are redistributed to fund beneficiaries	Part of the profits can be retained by the insurer
🏦 Legal nature	Separate entity created by an insurer to exclusively manage supplementary retirement	Managed within an insurance company along with other financial products

📌 A more flexible approach for FRPS

The main advantage of FRPS lies in their asset management. Thanks to the IORP II Directive, they have greater freedom to diversify investments and enhance yields without being subjected to the same constraints as life insurance under Solvency II.

FRPS enable: ✅ Long horizon investments, better suited to retirement liabilities.
✅ A better balance between yield and risk, by easing some solvency constraints.
✅ A dedicated management for pensions, providing more security for beneficiaries.

In contrast, classic life insurance, although offering enhanced protection, is often less efficient for retirement contracts because prudential constraints limit investment opportunities.

🔍 Which choice to prioritize for optimal retirement savings?

The choice between an FRPS and a classic life insurance depends on the saver’s needs:

• 🔹 Looking for management specific to retirement? → An FRPS is more suitable.
• 🔹 Wanting a versatile product for multiple financial goals? → A classic life insurance is a better option.

🏛️ Examples of companies that have adopted an FRPS

Since their inception, several large insurance groups have opted to establish their own Supplementary Professional Retirement Funds (FRPS). This strategic choice allows them to secure their retirement commitments, optimize long-term investments, and better meet regulatory requirements.

📌 Major actors who have structured an FRPS

Many companies have taken steps to create a FRPS, benefiting from a more flexible framework than Solvency II:

🏢 Insurance Group	🔹 FRPS implemented	📜 Main objective
AG2R La Mondiale	La Mondiale Retirement Supplementary	Securing group retirement contracts
Generali France	Generali Retirement	Improving retirement savings management
Swiss Life and Agrica	FRPS with ACPR approval	Optimizing long-term investments
Crédit Agricole Assurances	FRPS structured for retirement activities	Separating management of retirements and life insurance

📊 Why have these companies chosen an FRPS?

Many large insurance groups have decided to adopt an FRPS for several reasons: ✅ To secure their retirement commitments while relieving themselves of Solvency II constraints.
✅ To maximize their investments through more dynamic management.
✅ To offer better performance to beneficiaries under a relaxed prudential framework.
✅ To align their management with the IORP II Directive, which favors a long-term approach.

🔍 An expanding model

Since 2020, the creation of new FRPS has accelerated in France. The ACPR has approved multiple approvals, enabling insurers to better structure their supplementary retirement contracts. This trend is expected to continue, as FRPS are becoming a standard for managing occupational pensions.

💡 What are the benefits of an FRPS?

The Supplementary Professional Retirement Funds (FRPS) offer numerous benefits, both for insurers and for contract beneficiaries. Their creation helps optimize financial management of retirement liabilities while ensuring better security for policyholders.

📌 1. Optimized management for more profitable investments

Thanks to a more flexible framework than Solvency II, FRPS can diversify their investments and adopt more dynamic investment strategies. This allows them to:
✅ Invest more in high-yield assets, such as real estate, equities, and corporate bonds.
✅ Optimize long-term investment management, better suited for retirement liabilities.
✅ Improve fund performance, directly benefiting contract beneficiaries.

📌 2. Better solvency for enhanced protection of savers

FRPS benefit from a solvency level better adapted to managing retirement liabilities. Unlike insurers subject to Solvency II, FRPS can allocate more resources to investments without being penalized by excessive capital constraints.
This allows :
✅ Better financial security, ensuring that retirement obligations will be met long-term.
✅ Risk exposure can be controlled, thanks to annual stress tests imposed by the ACPR.
✅ Enhanced protection of beneficiaries, as the returns generated are fully redistributed to members.

📌 3. An regulatory framework conducive to long-term investments

The regulatory framework for FRPS is based on the IORP II Directive, which encourages long-term investment strategies. Insurers can thus :
✅ Avoid excessive market fluctuations by adopting a more patient and considered approach.
✅ Promote secure and profitable investments, suited for retirement savings.
✅ Ensure investment stability, preventing negative impacts from economic crises.

🔄 What impact on your retirement savings contract?

If your supplementary retirement contract is transferred to an FRPS, no major change is expected. However, some improvements can benefit policyholders.

📌 1. Guarantees remain unchanged

Transferring a contract to an FRPS does not affect the guarantees or commitments made by the policyholders. Specifically:
✅ The general conditions and benefits of the contract remain the same.
✅ The acquired rights stay unchanged, whether in the form of an annuity or a capital at retirement.
✅ The beneficiaries of the contracts retain the same advantages regarding retirement.

📌 2. Improved management for better yields

Shifting to an FRPS allows for enhanced financial performance of the contracts through optimized asset management. This means:
✅ More profitable investments, leading to better fund growth.
✅ Better resource allocation, aligned with retirement horizons.
✅ Cost reduction related to Solvency II requirements, which can directly benefit policyholders.

📌 3. Redistributed profit participation to members

Unlike a standard retirement insurance, where some profits may be retained by the insurer, an FRPS guarantees that profits are entirely redistributed to beneficiaries. This enables:
✅ Higher yields on retirement savings, thus increasing the capital available at retirement.
✅ Better fairness among members, as surpluses are exclusively for policyholders.
✅ Increased transparency, as FRPS are required to publish detailed financial management reports regularly.

🔮 The future of FRPS in France

Amid the growth of the supplementary pension market, FRPS are establishing themselves as an integral player in the French financial landscape. Their rise is driven by demographic, economic, and regulatory developments that favor more flexible and efficient retirement savings solutions.

📈 Rapid growth and a central role in 2023

The success of FRPS has been confirmed in recent years, notably in 2023, when:
✅ 83% of supplementary pension funds were managed by seven major FRPS, demonstrating their growing influence in the market.
✅ New ACPR approvals have been issued, allowing several insurers to transfer liabilities to these specialized structures.
✅ Investments in retirement savings have experienced a significant increase, supporting the growth of FRPS.

📌 Addressing demographic and economic challenges

With increasing life expectancy and declining public pensions, French people must increasingly plan their retirement. FRPS respond to these new issues by offering:
✅ A more profitable alternative to traditional systems, with improved investment management.
✅ A guarantee of financial stability, enabling beneficiaries to secure their savings.
✅ Diversification of investments, reducing the impact of economic fluctuations on retirement.

🏛️ An increasingly attractive model for insurers

Many insurance groups have already adopted the FRPS model to optimize their retirement management. With the PACTE law, which encourages companies to offer more attractive retirement savings plans, it’s likely that more players will join this movement to:
✅ Improve their retirement product profitability.
✅ Relieve regulatory constraints, benefiting from a less restrictive framework than Solvency II.
✅ Strengthen investor trust, through a clear separation of dedicated pension funds.

🔍 Perspectives on the evolution of FRPS

In the coming years, several trends are expected to strengthen the role of FRPS in France:
🚀 An increase in approval numbers granted by the ACPR, facilitating the migration of contracts to these structures.
📊 Adapting the regulatory framework, with potential adjustments to better regulate these funds while providing more investment flexibility.
💡 Emergence of new investment strategies, especially towards sustainable and responsible assets, in connection with ecological transition and green finance.

📌 The different categories of contracts eligible for FRPS

The Supplementary Professional Retirement Funds (FRPS) were created to secure and optimize the management of retirement commitments in France. They address several types of additional retirement contracts, covering self-employed workers, employees, and companies.

📜 Which contracts are covered by FRPS

Eligible contracts for FRPS include:

📝 Type of contract	🔍 Description
Madelin and Madelin Agricultural Contracts	Devices reserved for self-employed, liberal professions, and farmers, allowing for building a retirement savings with tax advantages.
Defined contribution schemes (Article 83)	Retirement savings plans subscribed by companies for their employees, where the employer makes regular contributions.
Defined benefit schemes (Article 39)	Schemes guaranteeing a predefined pension level at retirement, mainly for executives and employees with significant seniority.
Retirement Savings Plans (PER)	Products introduced by the PACTE law to simplify retirement savings, accessible to individuals and companies.

💡 Why are these contracts integrated into FRPS?

These contracts are specifically adapted for long-term management. By integrating these commitments into an FRPS, insurers benefit from:
✅ Better asset allocation, suited for long investment horizons.
✅ Enhanced protection for beneficiaries, as the returns generated are exclusively redistributed to members.
✅ More flexible framework, allowing investment optimization and improved profitability.

💰 How does the taxation of FRPS work?

One of the main advantages of FRPS is their attractive tax treatment, which encourages both companies and savers to subscribe to additional retirement contracts.

📌 Tax benefits for members

Savers investing in a contract managed by an FRPS benefit from:
✅ Tax deductions: payments made into PER, Madelin contracts, or collective schemes can be deducted from taxable income.
✅ Exemption on capital gains: during the savings phase, earnings from investments are non-taxable, promoting optimal capital growth.
✅ Reduced tax on life annuities: at withdrawal, the pension received benefits from a tax deduction depending on the recipient’s age.

📌 Tax benefits for companies

Employers implementing a supplementary retirement scheme via an FRPS can benefit from:
✅ Deductions on contributions paid for employees under a group PER or Article 83 scheme.
✅ Social charges exemptions on certain employer contributions for retirement savings.
✅ Optimized accounting treatment, improving management of the company’s liabilities.

🌍 FRPS and responsible investing: a model aligned with sustainable finance

As sustainable finance gains momentum, FRPS increasingly incorporate ESG criteria (Environmental, Social, Governance) in their asset management. The IORP II Directive also requires managers to consider these factors in their investment decisions.

📊 ESG strategies applied to FRPS

📢 FRPS investments are shifting towards more responsible assets to ensure better profitability while limiting risks. Observed trends include:

✅ Investments in renewable energy 🌱: FRPS favor funds invested in wind, solar, or green infrastructure.
✅ Reducing exposure to polluting industries 📉: many insurers are decreasing investments in oil and coal sectors.
✅ Shareholder engagement 💼: as institutional investors, FRPS participate in general meetings to influence social and environmental policies of companies.

💡 Why has ESG become a key issue for FRPS?

The shift towards a greener economy is encouraged by regulators and investors. Responsible investments offer:
✅ Greater resilience to economic crises.
✅ Alignment with European regulations on sustainable finance.
✅ Competitive returns, as ESG assets have shown solid long-term growth.

📢 What are the challenges for FRPS in the coming years?

Although FRPS are experiencing increasing success, several major challenges must be addressed in the upcoming years.

📌 1. Adapting the regulatory framework

FRPS benefit from a more flexible framework than Solvency II, but adjustments might be needed to ensure long-term stability. Expected evolutions include:
✅ Strengthening transparency requirements on fund and investment management.
✅ More stringent assessment of FRPS solvency, to prevent financial failures.
✅ Better European harmonization, to facilitate pension management within the EU.

📌 2. Improving policyholder information

Despite their potential, FRPS remain relatively unknown to the general public. To enhance their attractiveness, it is necessary to:
✅ Make FRPS more accessible via educational platforms and online simulators.
✅ Inform savers about the benefits and operation of FRPS.
✅ Communicate on fund performance, to reassure stakeholders.

📌 3. Maintaining attractive profitability

In a context of low interest rates, FRPS need to find alternatives to generate competitive yields. Strategies under consideration include:
✅ Invest more in rental real estate and infrastructure.
✅ Increase allocation to corporate bonds and private equity.
✅ Focus on ESG investments, offering a good compromise between profitability and risk.

The Supplementary Professional Retirement Funds (FRPS) represent a key reform for retirement management in France. Thanks to a specific regulation, they provide insurers with greater flexibility and beneficiaries with increased security.

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