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Impact Investing

IPE special report May 2018


Luxembourg may outsource national pension fund

LUXEMBOURG – Luxembourg intends to modify the running of its national pension reserve fund, which could result in management of the four billion-euro fund being put out to tender next year.

The pension reserve fund, established in 1984, has been used as a buffer in case of recession, but changes in demographic situations and the impending retirement of baby-boomers have convinced the government to put the fund to work.

Last week the government approved the plan to create an “appropriate structure to allow optimum management of the pension compensation fund”. It is planned that the money from the Reserve de Compensation will be issued to managers if and when the law is completed at the end of this year or next.

The restrictions on investments and low returns have encouraged the government to look to external managers, in search of a stable return. An official at the regulator of social security said that, at present, returns for the fund were relatively low due to asset allocation restrictions, but that even if the fund were outsourced, initially the portfolio would have to be low-risk.

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