Pension reserves grow 10%, reaching €26 billion
Luxembourg’s pension fund reserves grew by almost 10% in 2021 to reach €26 billion, Social Security Minister Claude Haagen told a parliamentary committee this week, as the fund is bracing for rising demand from an ageing population.
The fund’s reserves rose to €26 billion at the end of 2021 from €23.8 billion a year earlier, and have more than doubled in less than a decade.
Net returns on investments made by the pension fund in coming years are expected to be just over 4% by 2027, Haagen told lawmakers at a closed-door session of the Committee on Labour, Employment and Social Security on Thursday, according to a report of the meeting published on parliament’s website.
There are 120 companies currently blacklisted for investments by the pension fund, Haagen said, as they do not fit with a sustainable investment policy introduced in 2010. A further 180 firms are under “observation status”, the minister added, meaning they are judged likely to make the necessary improvements to meet the criteria.
Greenpeace Luxembourg have previously accused the government of engaging in "greenwashing", saying that the pension fund claimed responsible investments when in reality it invested millions in fossil fuels. Greenpeace said the Fonds de Compensation (FDC) invested more than half a billion euros in oil, gas and coal companies like Shell, BP, Total and Chevron in 2019.
Reserves held by Luxembourg’s pension fund could be exhausted by 2047 and contributions will have to rise in coming decades to cope with an ageing population, Haagen warned last year. The number of people claiming pensions rose by more than a quarter in the seven-year period from 2013 to 2020.
“Our general pension insurance scheme is financially sound and will continue to be so over the next few years,” Haagen said in April. “However, the demographic evolution is similar to that of many other countries and the growth of employment will not be able to compensate for this evolution indefinitely”.