Did you know that Luxembourg was in the top 3 of the countries the best ranked in terms of old-age pension in the world? Then how do retirement pensions work in Luxembourg, who can benefit from it and how?
Who can claim for an old-age pension in Luxembourg?
To be able to benefit from a retirement pension in the Grand Duchy of Luxembourg, it is necessary to have paid contributions to the old-age insurances, compulsory at one point or another of your professional career.
These periods of contributions, called “internships”, have to be of 120-month-long minimum and can have been done in another European country. The applicant will however have to have paid contributions for at least 12 months (one year) in Luxembourg in order to aim for a retirement pension.
It should be mentioned that the years of study (up to 9 years) carried out between the ages of 18 and 27, in Luxembourg or abroad, can be taken into account to obtain the number of years required. However, beware of contributions since these years are normally not contributed!
It is necessary to know that every employee or self-employed person in Luxembourg pays the contribution from his/her monthly salary to a national fund for the old-age pension, at the level of 8% of his salary. The employer also pays the same contribution at an equivalent sum 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 person has to meet several requirements:
- Having reached the legal age for retirement in Luxembourg, that is 65 years old
- Having paid contributions to the pension plan during a minimum period of 120 months, wether this insurance is compulsory (articles 170, 171, 172 of the Code de la Sécurité Sociale), continued (article 173), optional (article 173 bis) or a retroactive purchase (article 174).
It is possible to benefit from an early retirement:
- From 57 years old onwards, since the policyholder can prove 480 months of contributions to compulsory insurance;
- Or from 60 years old onwards provided that 480 months of contributions have been paid, among which 120 months for a compulsory, continued, optional or retroactive purchase insurance.
Request and calculation of the old-age pension
The applicant for the old-age pension has to make his request with the Pension fund of the country where he lives. This request must be made a few months before retiring.
The country of residence then calculates retirement credits according to the legislation and to that of one or several countries where the policyholder has paid contributions, according to the European or bilateral agreements. The policyholder will benefit from services from every country where he paid contributions, according to the legislation of each of these countries.
If when retiring, the applicant does not fulfil the conditions of contributions to the pension plan in Luxembourg defined above, he can ask for the refund of the contributions which he would have paid in Luxembourg (apart from the part the employer has paid). He then loses the possibility of getting a Luxembourg pension.
To know more about the old-age pension in Luxembourg and how to make a request of pension, visit the website of Caisse Nationale d’Assurance Pension.
Some figures on pensions in Luxembourg
It should be noted that the amount of the pension is capped in Luxembourg. In 2019, a pensioner who has worked 40 years in Luxembourg will receive maximum 8,525 euros per month. Similarly, the pension may not be less than 1,841 euros per month. Today, a pensioner who has spent his/her entire career in Luxembourg receives an average of 3,862 euros per month.
As for those who have not spent their entire career in Luxembourg, they receive an average of €1,266 per month, plus pensions from other countries in which they have worked.
Additional retirement pension
To best prepare for your retirement, consider contributing to a supplementary pension with an insurance company. By subscribing to this type of contract, you will receive an additional retirement benefit. This pension will be paid to you if you have contributed for at least 10 years, at the earliest at age 60 and at the latest at age 75.
By contributing to a supplementary pension, you benefit from tax deductions on your taxable base up to 3,200 euros per year.
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