Unilever became the first company to use Luxembourg’s new pensions vehicles when it set up an umbrella fund last June for its expatriate employees. The pooled plan is set up as a defined contribution ASSEP in which the beneficiaries are creditors to the fund, opposed to shareholders as is the case with a SEPCAV. The plan is a DC arrangement with death and disability risks covered and members can choose between a lump sum or an annuity. The fund has three administrators and six associate founders from Unilever.
At the time of the launch Unilever said it was attracted to the number of double tax treaties the country has which means it has better taxation for revenues than, say, an offshore trust. Initially the company selected two of its preferred providers to manage the funds, although the group refused to name them. Because it was a start-up operation, there weren’t huge sums of money involved so the group only appointed one manager for equities and one for bonds.
In December the international accounting firm KPMG joined the club by launching the country’s second SEPCAV (Alliance being the first.) The group will consider opening the fund out to employees within its entire international operations, although primarily it is only be open to partners and managers from other countries.
Using a purpose-built SEPCAV provided by Lombard International Assurance in Luxembourg the group will initially open the fund to its 17 partners based in the Duchy, but by the beginning of July, the 26 managers at KPMG’s Luxembourg operations will also become eligible.
KPMG will inject 20% of a partner’s salary into the fund with managers receiving a 5% amount as a top-up to salary. The structure consists of one fund with various sub compartments for different investment profiles: “It is really as flexible as a normal fund – but for pensions, so you can’t take the money out. But we do have a flexible pensions age between 50 and 60,” says Karin Riehl, partner at KPMG in Luxembourg.
“The fund is only at present for audit, management consulting and corporate finance partners and managers, and only for KPMG staff, not KPMG aligned companies as yet, because they have different partnerships structures. The company contributions will be on top of salary at least for the managers, because the partners pay themselves - so it is more of a tax driven thing,” she says.