MySmartPension is a tax-efficient insurance product that combines a guaranteed rate with stock market investments, allowing you to take advantage of opportunities while controlling risk.
Positive impact on your tax return
Through the lifetime of your policy, you can deduct the amount of your premiums pursuant to Article 111bis* of Luxembourg’s income tax law :
💠 maximum €3200 per year
💠 regardless of age or marital status
*Except in the event of early surrender of the policy during the first 10 years after subscription and before the policyholder reaches the age of 60.
Attractive returns, security and guaranteed interest rate
💠 A part of your savings is invested in the financial markets so that you can take advantage of high potential returns*
💠 Gradual reduction in your exposure to risk as you approach retirement
💠 A part of your savings is invested in a guaranteed 1.25% interest rate vehicle with profit sharing**
*Investment funds without guaranteed capital, subject to market fluctuations.
**Applied to the net amount invested after deduction of closing fees.
Choice of the retirement benefits
At the end of the policy, you choose:
💠 to receive your capital payment in one lump-sum
💠 to convert your capital into monthly annuities for life
💠 withdrawals
💠 or a combination
💸 The advantages of MySmartPension
MySmartPension: savings combining guaranteed capital and investments to take advantage of market opportunities.
Do you want to maximise your return opportunities? Opt for a new-generation retirement savings model!
A flexible solution that allows you to invest in guaranteed rates or unit-linked funds according to your objectives and risk profile.
For added convenience, you can choose one of our predefined profiles:
Or choose your investment vehicles according to your risk appetite, with up to 100% guaranteed rate or 100% unit-linked.
Agree on a periodic amount, but remain free to make additional payments at any time.
You nominate a beneficiary who will receive your saved capital in the event of death during the term of the policy. You are also free to designate the beneficiaries for the payout of the capital in the event of death.
AXA offers you a choice of funds that take sustainable investment into account. You can find the list of vehicles offered by AXA Assurances Vie Luxembourg and the documentation required under the sustainable financing regulations here.
More than support, AXA offers you comprehensive management by experts:
- AXA professionals manage your investments.
- your risk exposure will be adapted to your age over time.
To take advantage of the best opportunities and minimise risk
- investment in dynamic and defensive assets
- geographical diversification (Eurozone, USA, emerging countries)
- investment in growth sectors in the long term (health, raw materials, property, infrastructure)
On the contract maturity date:
- the capital repayment or annual withdrawal is taxable at half the overall rate;
- the life annuity is 50% tax-exempt.
Examples of tax deductions
Annual payments: €1,500
Jean is 30 years old and just starting out in working life, but he wants to anticipate and prepare for his retirement now, while benefiting from the attractive tax deductions offered by retirement savings.
His annual taxable income is €40,000.
During an evening with friends, he was advised to subscribe to MySmartPension, to benefit from the attractive returns on offer and savings invested according to his objectives.
After a meeting with his intermediary, his investment profile was determined to be dynamic. His savings will be invested in unit-linked funds to maximize returns.
What will Jean's annual tax savings be?
On his annual premium of €1,500, the maximum tax refund will be €420.
The real cost of his savings will therefore be €1 080 per year.
What savings can Jean expect when he reaches retirement age?
With MySmartPension, Jean can choose between 3 options:
- Recover the amount of the capital saved, i.e. €106,000 (assuming a neutral scenario), in a single payment.
- Opt for a life annuity of the capital.
- Combine payment of part of the capital with a monthly life annuity.
Annual payments: €3,200
Maria is 40 years old and wants to prepare for retirement. With an annual taxable income of €62,000, she decides to subscribe to MySmartPension to ensure a complementary income when she reaches retirement age (65).
Based on the various questions and analyses carried out with her AXA intermediary, her investment profile is defined as Defensive.
Her savings will be split between guaranteed-rate funds and investment funds to secure her savings while maximizing returns.
What will Maria's annual tax savings be?
On her annual premium of €3,200, the maximum tax refund will be €1,334.
The real cost of her savings will therefore be €1,866 per year.
What savings can Maria expect when she reaches retirement age?
With MySmartPension, Maria can choose between 3 options:
- Recover the amount of capital saved, i.e. €118,000 before tax* (assuming a intermediate scenario), in a single payment.
- Opt for a life annuity of the capital.
- Combine payment of part of the capital with a monthly annuity.
*The example provided above is only an indicative estimate of the tax impact and potential return. It takes into account the guaranteed gross rate of 1.25% (on the amount invested after deduction of closing fees) for 8 years and the assumption that this rate will remain unchanged throughout the investment period, a profit-sharing rate (which is not guaranteed) and an investment in a mix of unit-linked funds and guaranteed-rate funds.
The applicable regulations are subject to change. For a comprehensive analysis tailored to your personal and financial situation, we recommend that you consult a qualified professional.
Retirement insurance is a fundamental pillar of the social security system, providing essential protection against the uncertainties of old age. By anticipating your financial needs at the end of your career, a pension plan not only provides economic support, but also the peace of mind that is essential if you are to make the most of this new life chapter.
Building up personal retirement savings makes sense to:
- enjoy tax benefits
- maintain a comfortable standard of living
- ensure financial independence
The pension system in Luxembourg is based on three pillars:
The allocation and amount of statutory pensions in Luxembourg takes three criteria into account:
- Age: the legal retirement age is 65. However, it is possible to take early retirement at 57 or 60 under certain conditions.
- The period of professional activity during which you paid contributions (the qualifying period): 120 months minimum in the European Union, Switzerland, Liechtenstein, Norway and/or Iceland (including at least 1 year in the Grand Duchy). To qualify for a full pension, you must have completed a 40-year qualifying period.
- Income earned during the qualifying period.
For further information, visit the Caisse Nationale d'Assurance Pension website.
Your employer may choose to enrol you in a pension plan to supplement your state pension.
To avoid the risk of a drop in your standard of living when you retire, we strongly advise you to take out personal pension insurance with a private insurance company such as AXA with MySmartPension.
What's more, these products are tax-deductible (Art. 111a of Luxembourg’s income tax law), provided they are taken out for a minimum period of 10 years (find out more on our Tax page).
There is none! It's the same type of life insurance, only under different names.
Only cross-border commuters who file a tax return in the Grand Duchy of Luxembourg can take out pension insurance, and thus benefit from tax advantages and retirement capital for the future.
It all depends on your tax situation, income and investment. See Jean and Maria's examples above.
There is no maximum limit, but 3,200 euros per year per taxpayer can be deducted from your tax return.
The PER is a savings product specifically designed to anticipate the loss of income on retirement. Life insurance, on the other hand, is a savings and investment product that can be used for a variety of purposes: building up capital, preparing for retirement, protecting loved ones in the event of death or passing on assets. Find out more about the advantages of each in our blog article.
Find out more about retirement insurance contracts on the Luxembourg inland revenue website.
Preparing for retirement with tax breaks in Luxembourg
Since the tax reform of 2017, the Luxembourg state intends to strengthen the purchasing power of taxpayers, residents and cross-border workers. Among the measures adopted, the raising of the tax deductibility limits related to insurance is a strong focus. This is a good way to prepare for the future while reducing taxes.
How to calculate your retirement in Luxembourg?
Whether you are close to retirement or it's a long way off, your retirement worries you and you are asking a lot of questions. Remember that making a success of this new life is: preparation. Focus on how pensions work in Luxembourg.
How to prepare for a comfortable retirement in line with your age?
As you know, with an ageing population, the pension system in Luxembourg is likely to become less generous in the coming years. All the more reason to prepare yourself as soon as possible for the challenge of declining resources. The Luxembourg government actually encourages you to do so through tax benefits.
Insurance advisers at your service
In each region of the Grand Duchy, of Luxembourg, an advisor is at your disposal to offer you their services and help you prepare the future with confidence.
