Pensions insurance/benefit (retirement, invalidity and survivor)
The Luxembourg pension system in compulsory (without opting out possibility) for anyone working within Luxembourg and consists of old-age retirement, early retirement, invalidity and survivor's pensions. It is possible for employers to create a supplementary pension scheme for their employees.
Retirement pension
The normal retirement age in Luxembourg is 65. However it is possible in certain circumstances to take early retirement from 57 and to also continue working until the age of 68.
To qualify for a retirement pension at 65 the beneficiary must have worked and paid social security benefits for at least ten years (120 months). If the beneficiary has worked and paid social security benefits for forty years (480 months) they are entitled to take early retirement from the age of 57.
Contributions are split equally in to three parts with the employee, employer and government each paying 8% of the employee's salary.
EU citizens (excluding Romania and Bulgaria) and citizens from Iceland, Liechtenstein, Norway and Switzerland
Aggregating of pensions throughout the EU.
All insurance periods completed throughout the European Union member states will be taken into account when qualifying for a Luxembourg pension, providing the beneficiary worked and paid social security benefits in each country for at least one year (12 months). Pensions will be paid from each country, the amount per country depending on the length of employment in that country, e.g. if you have worked in three countries you will get three part-pensions.
These rights also apply to citizens of Norway, Iceland, Liechtenstein and Switzerland. Luxembourg also has bilateral agreements with Brazil, Canada, Cape Verde, Chile, Croatia, Quebec, Serbia, Tunisia, Turkey and the USA (see details below).
EU member states also have agreements whereby if you have worked in Luxembourg for less than twelve months, you can credit the time to the state pension of your country and claim the money when you retire.
The beneficiary does not have to live in Luxembourg to claim their pension, which will be sent automatically.
Please note: your pension is taxable income and you will continue to pay income tax (although no further deductions for state pension) in your country of residence.
Non-EU citizens retirement pension rights
Luxembourg has bilateral agreements with many countries outside the EU, including Brazil, Canada, Cape Verde, Chile, Quebec, Tunisia, Turkey and the USA (more in negotiation), whereby while you work in Luxembourg you will be covered by the Luxembourg insurance scheme and pay social security taxes only in Luxembourg. This means that while you are working in Luxembourg you and your employer will pay into the Luxembourg pension scheme and, if you work in Luxembourg for twelve months or more, you will be entitled to receive a part of your pension from Luxembourg. In some cases, if you work less than twelve months you may be entitled to add the credits onto your pension scheme in your home country.
As these agreements vary with each country we recommend you check the exact details with your embassy. For countries not listed it is important that you speak with your embassy before signing a contract to know exactly what your benefits will be, as it is possible you will have to pay social security insurance in both countries simultaneously.
Invalidity pension
In order to obtain invalidity pension the beneficiary must have been in employment for twelve months during the last three years preceding invalidity (unless the invalidity is due to an accident or professional disease). The medical criterion must also be fullfiled, e.g. the beneficiary must be unable to pursue his/her professional activity or another activity in accordance to their remaining work capability. Entitlement to invalidity pension normally follows the maximum length of extended sickness benefit and after the beneficiary has undergone medical examinations to determine his/her level of invalidity.
Survivor's pension
This is payable to:
- the spouse of the beneficiary, regardless of gender, providing the beneficiary is either retired or has been in employment for at least twelve months within the three years preceding their death (unless death occurred due to an accident or professional disease); and/or
- the orphan(s) of the deceased beneficiary up to the age of 18 (27 if still student and no age limit if disabled). The child loses their right to claim survivor's pension once they marry (unless they are still a student); or
- the deceased's divorced spouse, providing they have not remarried.