On 1 April 2021, the scheme was converted into a Mandatory Company Savings Plan (Plan d’Epargne Entreprise Obligatoire – PERO) within the framework laid down by the French Pacte law (Loi Pacte). This made it possible to introduce many improvements to the scheme, such as new options for paying into it, more diversified financial investments and more flexible exit conditions.
L’Oréal has also set up defined benefit schemes with unvested entitlements, initially differential followed by an additive defined benefit schemes, in order to take into account important developments impacting these schemes and with the aim of building a coherent system between the different pension schemes that exist in the Company.
French Order No. 2019-697 of 3 July 2019 that transposed EU Directive of 16 April 2014 into French law no longer allows the acquisition of unvested new rights in schemes open on 20 May 2014 for employment periods after 31 December 2019. In this context, L’Oréal froze the rights at 31 December 2019 and, in 2021, finalised the establishment of two substitution schemes with vested rights in compliance with French Order no. 2019-697 for employment periods from 1 January 2020, following the publication of the circular of 23 December 2020. These schemes are the “Supplementary pension scheme for Former Senior Managers with vested rights” (Retraite supplémentaire des Retraités Anciens Cadres Dirigeants à droits acquis) and the “Retirement Income Guarantee for former senior managers with vested rights” (Garantie de Ressources des Retraités Anciens Cadres Dirigeants à droits acquis). These schemes are considered as the continuations of the old schemes because of the consistency in terms of population and benefits.
The “Supplementary pension scheme for Former Senior Managers” (Retraite supplémentaire des Retraités Anciens Cadres Dirigeants) concerns retirees who have held positions as senior managers for a minimum of 10 years, hired or promoted to this position between 1 January 2016 and 4 July 2019, who end their career in the Company. This is an additive defined benefit pension scheme which grants entitlement to payment of a life annuity. The reference salary taken into account for calculation of the pension is the fraction of the salary which exceeds six times the French annual Social Security ceiling. The calculation base of the supplementary pension is the average of the revalued reference salaries for the best three full years of activity out of the seven calendar years prior to the end of their career. The supplementary pension is 1.36% of the calculation base per year of service within the Group until 31 December 2019, up to a maximum of 25 years. Any retiree who so wishes could elect an option of a surviving spouse pension.
Access to the “Retirement Income Guarantee for former senior managers” (Garantie de Ressources des Retraités Anciens Cadres Dirigeants) was closed on 31 December 2015. This scheme, created on 1 January 2001, was open to former senior managers of L’Oréal who, in addition to fulfilling the requirement of having ended their career with the Company, met the condition of having had the status of senior manager for at least ten years at the end of their career. It provides entitlement to payment to beneficiary retirees of a life annuity, as well as, after their death, the payment, subject to conditions, to their spouse and/or ex-spouse(s) of a surviving spouse pension and, to the children, of an orphan pension. The calculation base is the average of the salaries for the best three years out of the seven calendar years prior to the end of the senior manager’s career at L’Oréal. The pension is calculated on the basis of the number of years of professional service in the Company until 31 December 2019, capped at 25 years, each year leading to a progressive and regular increase of 1.8% in the level of the guarantee. The pension cannot exceed 50% of the calculation base or exceed the average of the fixed part of wages. A gross annuity and gross lump sum equivalent are then calculated, taking into account the sum of the annual pensions accrued by beneficiaries as a result of their professional activity and assuming that their retirement age is 65. The life annuity is the result of the conversion into an annuity at the beneficiaries’ actual age on the date they apply for their pension of the gross lump sum equivalent, less the amount of all payments due as a result of termination of the employment contract, excluding any paid notice period and paid holiday, and less all salaries paid under any early retirement leave. Around 330 senior managers are eligible for these schemes if they fulfil all conditions after ending their career with the Company.
Access to the “Pension Cover for Members of the Comité de Conjoncture” (Garantie de Retraite des Membres du Comité de Conjoncture) was closed on 31 December 2000. This former scheme granted entitlement to beneficiary retirees, after having ended their career with the Company, of a life annuity as well as, after their death, the payment under certain conditions to the spouse and/or ex-spouse(s) of a surviving spouse pension and, to the children, of an orphan pension. The calculation base for the pension is the average of the salaries for the best three years out of the seven calendar years prior to the end of the beneficiary’s career at L’Oréal. The pension is calculated on the basis of the beneficiary’s number of years’ service, with a ceiling of 40 years, it being specified that at the date of closure of the scheme, on 31 December 2000, the minimum length of service required was 10 years. The pension may not exceed 40% of the calculation base, plus 0.5% per year for the first twenty years, then 1% per year for the following twenty years, nor exceed the average of the fixed part of the salaries. Around 120 senior managers (active or retired) are eligible for this scheme subject to the requirement, for those in active employment, that they fulfil all the conditions after having ended their career with the Company.
Since 2003, L’Oréal has proposed that employees make savings with a view to their retirement within the scope of the PERCO. If the profit sharing is placed in the PERCO, a 100% matching contribution is paid by the Company on the first €1,200 gross and 50% there after (capped at €4,600/year total PERCO employer contributions). For employees who pay 100% of their profit sharing into the PERCO for five consecutive years, an employer contribution of €600 gross is paid into the PERCO (Club PERCO) in the fifth year. Since 2021, an additional employer contribution of €150 gross has been paid from the sixth consecutive year in which 100% of the profit sharing has been invested into the PERCO. Each year, employees may also transfer 10 days of saved leave time (Compte Épargne Temps, or CET) in the PERCO. An additional employer contribution of 20% is paid for these days.
L’Oréal pays close attention to its employees’ retirement conditions. The existing arrangements are, in particular:
