Subscribe to ourNewsletter

Luxembourg is an established centre for investment fund management and administration.

There are three Luxembourg structures that allow a sponsor to establish a pension funding vehicle within the meaning of the EU Directive on pension funds (Directive on the activities of institutions for occupational retirement provisions, IORP, as amended). Aspiring to attract foreign employers and sponsors, the characteristics of the Luxembourg legislation allow a high degree of flexibility in pension plan design and the investment of pension plan assets.

Two of the three pension fund vehicles are regulated by the financial supervisory authority, the Commission de Surveillance du Secteur Financier (CSSF):

  • SEPCAVsociété d’épargne-pension à capital variable (pension savings company with variable capital). This vehicle, which is similar to the SICAV, can only be used for defined contribution (DC) schemes.
  • ASSEPassociation d’épargne-pension (pension savings association). This vehicle is suitable for both DC and/or defined benefit (DB) schemes. It is able to pay out a lump sum or an annuity and may also pay ancillary benefits such as death in service, disability pension and payments to widows and orphans.

A third pension fund vehicle is regulated by the insurance supervisory authority, the Commissariat aux Assurances (CAA). The CAA pension fund is suitable for DC, DB and/or supplemental benefits in case of death or disability of members. It has a choice of four legal structures, but in practice the association sans but lucratif (asbl), a non-profit association, is the most commonly used.

All three vehicles can be organised as an umbrella structure: different share classes can be used to separate investment styles (DC plans) or different types of plan (DB and DC schemes), or where differing social and labour law provisions make this necessary. All three types of fund can be organised as a “multi-employer” scheme.