How to calculate your retirement in Luxembourg

How are old-age pensions allocated?

The legal retirement age is set at the age of 65 in Luxembourg, provided that there are 120 months of insurance paid (mandatory, continued, optional or retroactive purchase).These periods are called "stages" in French.

Nevertheless, an early retirement pension can be granted at age 57 if the insured person has completed 480 months of compulsory insurance periods.

To benefit from your pension, you must make a formal request to the National Pension Insurance Fund (CNAP).

The form can be online. Cross-border workers must approach the competent body for their place of residence.

"Because the processing time is pretty long, consider carrying out this process several months before your retirement date" advises Maria.

This retired nurse was able to claim her pension rights at the age of 60.In fact, she had a period of compulsory insurance of 32 years because of her salaried professional activities, to which was added an additional period of 8 years for bringing up her two children.

Evaluate the amount of your pension

The amount of your pension depends on the number of years you have contributed (the lump sum increases) and the amount of contributory income earned during the insurance term (proportional increases).

If you have completed a 40-year "stage", your pension cannot be less than 90% of the reference amount. If you have at least 20 years of insurance, the pension is reduced by one fortieth per missing year.

Find out here more information about how to prepare retirement depending on your age.

The employer's supplementary pension

In Luxembourg, many people benefit from a pension plan offered by their employer. Even though it is still optional, this system constitutes the second pillar of the pension system in the Grand Duchy.

The employer can finance this pension plan in the form of internal or external financing (from an insurance company or a pension fund).

Bruno, retired accountant, can only rejoice: "I worked for 20 years in a service company that had put a supplementary pension scheme in place. In addition to my legal pension, I am now receiving a supplement in the form of a life annuity. "

With this type of complementary scheme, the employer has a great asset for recruiting and retaining his teams. This can even be an alternative to a salary increase, with many benefits for both parties.

If the plan allows, employees can make personal contributions to this supplementary pension scheme, with tax deductions as the key.

Finally, note that in the form of a life annuity or a lump sum, supplementary pension benefits are not taxable in Luxembourg.

Prepare for your retirement

Spending time helping non-profit organisations, developing your artistic talents, devoting time to your grandchildren, these are definitely resolutions that will allow you to fully enjoy your retirement.

And to avoid financial obstacles on your way, think about retirement insurance.

"I did not want to lose purchasing power when I retired," says 68-year-old Claudia. So for my fortieth birthday I decided to set up additional savings. This is an approach that allowed me to pay less tax because tax deductions were incentives. At present, the capital is paid in the form of a monthly pension. This is a supplementary income that is essential for me to feel happy and spoil my loved ones.

Our last tip: get in touch with a professional who will study your personal situation with you and will give you all the advice that is appropriate to your needs.