Do you know that in 2017 Luxembourg ranks among the top 10 countries in the world with the best positions in terms of old-age pension? So how do pensions work in Luxembourg, who can benefit from it and how?
Who can claim an old-age pension in Luxembourg?
To qualify for a retirement pension in the Grand Duchy of Luxembourg, you must have contributed to compulsory old-age insurance at some point in your professional career. These contribution periods, called “internships”, must be at least 120 months and may have been completed in another European country. The applicant must, however, have contributed at least 12 months (1 year) to Luxembourg to qualify for a pension.
It should be known that any employee or self-employed person in Luxembourg contributes to his / her monthly salary to a national fund for the old-age pension, up to 8% of his / her salary. The employer also contributes at the same level on behalf of the employee.
Old age pension
In order to benefit from an old-age pension in Luxembourg, the employee or the self-employed worker must meet several conditions:
• Having reached the legal retirement age in Luxembourg, ie 65 years old,
• Having contributed to the pension insurance for a minimum period of 120 months, whether this insurance is compulsory (articles 170, 171, 172 of the Social Security Code), continued (article 173), optional (article 173 bis) or in retroactive purchase (Article 174).
Early retirement pension
It is possible to benefit from an early retirement pension:
- from the age of 57, when the insured person proves that 480 months of compulsory insurance contributions
- or from the age of 60, subject to 480 months of insurance contributions including 120 months of compulsory insurance, continued, optional or retroactive purchase.
Application and calculation of the old-age pension
The claimant of the old-age pension must apply to the Pension Fund of the country where he resides. This request must be made a few months before the retirement age.
The country of residence then calculates pension entitlements, according to its legislation and that of the country or countries in which the insured person contributes, according to European or bilateral agreements. The insured will receive benefits from each country where he has contributed, in accordance with the legislation of each country.
If at the age of retirement, the applicant does not meet the conditions of contributions to the old-age insurance in Luxembourg as defined above, he can claim the refund of the contributions he would have made in Luxembourg (minus the employer’s share) . He then loses the benefit of any Luxembourg pension.