Luxembourg would do well to follow the Dutch example in its efforts to start a real pension fund business, according to Frits Deiters, country manager of ABN AMRO Luxembourg and director of the Luxembourg Investment Fund Association.

Three main challenges to the Luxembourg pension industry are to find the right legal framework for pension funds with necessary flexibility attached, the right tax climate to allow growth, and also the appropriate means for supervision without excessive restriction.

With this in mind, I believe we could learn much from Holland."

Regarding the Dutch legal framework, Deiters pointed out the equal balance of representation existing between employers and employees in any decision making.

A combination of pension acts, a legal 'foundation' and a supervisory body of insurance commisioners, also ensured any problems could be dealt with swiftly and thoroughly, he added.

Holland's favourable tax climate, with premiums paid being tax de-ductible and pension funds not ob-liged to pay any corporate tax, was also held up as a future example to Luxembourg.

Deiters also suggested looking towards the IML for a possible regulatory supervision structure.

"The big future debates though in Luxembourg will be in prudent investment management against legislation, and also the change from defined benefit to defined contribution pension schemes.""

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