Dear AmCham Members, Newsletter subscribers, Partners and friends,
My sincere thanks for the positive feedback you all have sent to me expressing support for the AmCham analysis and recommendations to further strengthen our economy and those who work so hard to keep the economy strong. As I said last week, the hard work of the government over the past two years has improved Luxembourg’s attractiveness as an international business location and held at bay the dire analysis and predictions contained in the two-year-old YouTube video we featured (please see my chairman’s remarks and the video). Be assured all of the topics related to the promotion of economic prosperity and supporting the international business community remain at the very top of AmCham’s focus.
This past week, our Financial sector committee put on an excellent after-work evening networking conference at the Meliá Hotel featuring Claude Marx, the Director General of the CSSF. 100 senior members of the Luxembourg financial sector were present. We are happy to share the pictures of the event.
The highlights included:
1. Regulatory focus on credit risk with rising default rates in lending to construction companies an area of concern.
2. Cybersecurity as increasing cyberattack threats require banks to invest in protections that strengthen vigilance and resilience.
3. Regulatory compliance remaining a core imperative for financial institutions to have resources and mechanisms in place.
4. AML and Counter Terrorist Financing continuing to evolve as money laundering and terrorist financing methods grow more sophisticated across borders.
He also spoke on the role of AI, simplifying Green Finance legislation (promoting more use of easy to understand concepts like LuxFlag), and the need to streamline bank account opening to keep Luxembourg competitive. Thank you to the companies of Amcham’s Financial Services Committee for having sponsored this great event.
This week our focus is on pension reform. We congratulate the government for taking this issue on at an early stage while there are still cash reserves (as compared to most other European countries who must pay pensions out of current income). The problem we face is quite simply caused by our success. Gradually over time, because of healthier living and advancements in medical capabilities, people are living longer than when the system was first implemented. As a result of these longer life spans, the trust fund of reserve has reached the point that more money is going out than is coming in in contributions. This is, of course, creating an unsustainable situation which puts the pension system at risk of gradually becoming unable to pay the benefit obligations earned by the current (and future) retirees.
Of course, neither companies nor employees want to contribute more… and neither does the government itself. So, our challenge, as a country, is to find a solution to ensure the continued viability of the system.
There are two additional issues of concern which need to be resolved and these relate to the circumstances of the Expat community, the large majority of whom only are able to gain partial pensions because they often come to work in Luxembourg later in their careers and the special circumstances of parents who take career breaks while their children are young or to care for elderly parents.
We believe both of these groups will benefit from an allowance to continue to work, on a voluntary basis, beyond the age of 65 and delay the start of their pensions while continuing to work and contribute into the pension systems so they can increase the amount of their pensions at a later stage when they finally decide to stop working. So doing will help partial pension eligibles gain through their voluntary work efforts, greater pension rights which will help them live in dignity in old age when they finally decide to stop working. This topic is addressed in our letter to the Prime Minister and his team which we are publishing in this newsletter issue. We hope you agree with our analysis and recommendations and welcome your feedback to me (Paul@amcham.lu).
We are working on an exciting range of new projects and a full slate of upcoming events in the last three months of this year. Please find more details (and a wonderful food recipe!) in this newsletter.
My respect and warm regards,
Paul Schonenberg
Chairman and CEO
AmCham.lu