Home Finance Retirement Pensions in Luxembourg
Last update on December 25, 2018

If you’re working in Luxembourg there are benefits in the long-term for retirement funds.

Pension planning across Europe is always slightly changing depending on inflation, deflation, population and demographics. In 2016, anyone who decides to live and work in Luxembourg must pay a 24-percent gross income of their earnings to government pensions for old-age and invalidity citizens. Recent concerns have been whether or not this is enough for the soon-to-retire baby boomer generation, and if the new workforce can supply this great retirement demand.


For retirement in Luxembourg, a country with a small population and workforce, the government goes through slight adjustments to roll with the times. Retirement in Luxembourg as an expat is completely possible, but there are “pillars” of pensions everyone living in Luxembourg falls under. This article takes a closer look at these options, but in the end if you are serious about pension planning in Luxembourg, it’s smart to hire an advisor.

State “old age” pension in Luxembourg

Old-age pension are social security dues paid to the government, and is accessible when a person retires at 65 years of age or older. When the time gets closer to retirement at work, you’ll notice that the window to begin pension paperwork opens a few months before retirement age.

To qualify for “old age” pension, you’ll have had to make pension contributions for ten years (120 months) or longer in Luxembourg or another EU country. Pension payments from countries within the European Union transfer to each other. Even some non-EU countries like the United States can transfer full or partial credit, so look into the conditions from your home country.

Once retirement has begun, the usual pension percentage paid monthly is around 70 percent of the average salary made during your final year of employment. There is a maximum contribution from the government of between EUR 8000 a month and a minimum of about EUR 1700 a month, roughly, for a 40 years period. However, there are many exceptions to these numbers in the fine print, and each case is relatively different, so the numbers above should be seen as more of guidelines.

Adjustments depending on the years worked and income received play a part, as well as the specific sector of employment. Regardless, if you reach age 65 and the employment time-span has not reached 120 months, you are refunded any contributions made for pensions in Luxembourg to the government. In general, social security amounts are divided into proportional amounts, fixed amount and year-end allowances. This applies to any pension funds being given out by the government, including disability pensions.

Early retirement in Luxembourg

If you’ve worked exceptionally long and paid social security throughout that time, specifically 480 months (about 40 years), there are options for early retirement at the age of 57. Others can retire at age 60 if they’ve paid pension insurance from different pillars of retirement savings for a total of 480 months.

Company Pensions

A second pillar are company pensions, or the pension amount your employer takes from your paycheck to match that of your social security amount. Many companies make this an option that internationals can decide to take or not to take.

There are a few great perks if you decide to join your company pension. First, funding of the plan is tax free, while an extra personal contributions are tax deductible. Second, the amount is usually matched to your own social security investment (about EUR 100 max), which means double the investment. Third is that the benefits received upon retirement are tax free, although this might depend on if you decide to reside outside of Luxembourg. Last, you can take your benefits from age 60 to 65, and a “death in service” benefit is usually included.

The important thing to remember is doing the math and knowing enough to see exactly the benefit amount at the age of retirement. This might require a bit of help from a friend or a professional pension planer. Most people living in Luxembourg opt for balancing their pension investments between social security, company pension, and personal savings.

Personal Pensions

Personal pension in Luxembourg are savings accounts you start with your bank inaccessible until retirement age. The maximum deductible amount beings at around EUR 1500 until you’re over 40 years old, and increases slight in increments of a few hundred every five years until up to 74 years of age. The good news with personal pension plans is that premiums are tax deductible, and half of the fund can be given in cash when you retire.

There are also cons to putting all your eggs in the personal pension plan. While the maximum premiums are limited to age, accessibility to the funds will be restricted until you are 60-year-old despite life-emergency cases. While half of the retirement sum can be handed out in cash, it will be taxed at half your tax rate the year you withdrawal. There are also hidden taxes and rules on how the other half of the fund is stored, and upon an early death there are restrictions to pay-outs depending on circumstances and retirement schemes.

Survivor’s pension in Luxembourg

Survivor’s pension in Luxembourg is pension that is paid to the surviving spouse (widow or widower) or a divorced spouse under certain circumstances. Survivor’s pension can also be paid to the beneficiary’s children, or surviving spouse when married to the deceased for at least one year, unless a child is born from this marriage or the death is accidental. If the beneficiary dies without being married, the pension goes to direct blood relatives and direct relatives by marriage.

Invalidity pension in Luxembourg

Invalidity pensions are applicable if a disability is caused from an accident, or there is a diagnosis of illness or incurable disease. Those who feel they might qualify must provide evidence of insurance payments adding up to 12 months over three years before date of disability noted by social security medical control sector. While it is not necessary to be insured when the invalidity occurred, some proof of insurance payments from before needs to be shown to prevent any suspicion.

Pension terms (French – German)

Pension: pension – Rente
Old-age pension: pension de vieillesse – Altersrente
Early retirement: la retraite aniticipée – vorzeitiger Ruhestand
Survivor’s pension: pension de survivant – Hinterbliebenenrente
Invalidity pension: pension d’invalidité – Invaliditätsrente