Pension funds

The pension savings companies with variable capital (SEPCAVs) and pension savings associations (ASSEPs) are two legal entities created by the Law of 8 June 1999 with the aim to allow these entities to gather the complementary pension promises issued voluntarily by Luxembourg, foreign or multinational undertakings for their employees. Today, ASSEPs and SEPCAVs are governed by the Law of 13 July 2005 on institutions for occupational retirement provision in the form of pension savings companies with variable capital (SEPCAVs) and pension savings associations (ASSEPs) as amended by the law of 15 December 2019 (the “Law”) which transposes into Luxembourg law Directive (EU) 2016/2341 on the activities and supervision of the institutions for occupational retirement provision (IORPs).

As regards the legal nature of these IORPs, SEPCAVs, on the one hand, have the structure of a company of which the members and beneficiaries are shareholders who will have a share of the profit when retiring. On the other hand, ASSEPS have the structure of an association in which the rights of members and beneficiaries are in the form of a debt claim and which, when the members and beneficiaries retire, will be distributed either as profit or as payment of an annuity and, where applicable, ancillary benefits. The flexibility of these two Luxembourg vehicles allows them to adapt to the pension promises which have different characteristics, according to the members’ home country. Indeed, the national social laws of the different States regulate more or less precisely the minimum content and essential terms of the collective pension promises that SEPCAVs and ASSEPs are gathering.