Pecoma International, the Luxembourg based pensions consultant is to launch a new pooled retirement vehicle ‘Luxpension’ this spring for small and medium sized enterprises in the Duchy – a product which it will open out to the European pensions market as a whole if feasible.
“ For the moment we are starting the product for Luxembourg based employers, but we are studying whether there is a way eventually for foreign companies to come and join this plan, “ says Fernand Grulms, former chief economist at the Luxembourg bankers association and general manager at Pecoma.
Pecoma, a joint venture between La Luxembourgeoise, Luxembourg’s largest life insurer and Banque et Caisse d’Epargne de l’Etat and Compagnie Fiduciaire, was set up last September and will run the new fund under June 1999’s Assep regulations – specifically designed for the pensions market.
Grulms says Luxpension already has two clients on board: “ At this stage I don’t want to state publicly who they are but there is one quite large company with 150 affiliates and the other is a very small firm with three people.”
He believes business will grow as Luxpension gains visibility: “For the moment I believe we are the only provider of such a product in the market and what I am telling customers is that Luxembourg companies are still too small to set up their own pension funds. What I am proposing to people is an existing scheme – which is this one.”
“ There are a number of other companies which have expressed an interest and this will increase once it is finally launched and people can see how the fee structure operates.”
Grulms adds that the fee system will likely be based around a mix of a percentage of the yearly cash flows into the fund and the overall level of funds under management.
The Luxpension structure, he explains, will take the form of five different pooled compartments with varying degrees of investment aggression – the last one being solely invested in cash.
“ We hope to launch officially in May and we are now in the process of setting up the detailed planning. We had a positive opinion from the authorities on the set-up of Luxpension but have not yet had official approval.”