Debate on the statutory pension in Luxembourg: issues and perspectives in video form

At present, it is the contributions of the working population during one year, that are used to fund the pensions paid out to retired people in the same year.  The 24% contribution rate is financed by 3 parties : 8% are paid by the employee, 8% by the employer, and the last 8% by the Luxembourg State.

On average, these contributions have financed a statutory pension of 75% of the average salary of the member's career. There is an imbalance between the sum of contributions and the sum of pensions paid out : On average, a pensioner receives almost double the amount they contributed during their career.

It is the significant growth in the working population in recent decades that has allowed this system to persist until now. The number of active contributors has actually increased compared to the number of pensioners. This growth in the working population has therefore made it possible to accumulate a reserve.

But our contributing population can't grow forever. From 2027, the amount of pensions paid out will be higher than the amount of contributions. The reserve accumulated so far will be breached. And from 2047, it will be completely exhausted.

Our way of life has changed since the introduction of legal pensions. At that time, the working population started working at the age of 15 and retired at 60. Thus, 40 to 45 years of contributions allowed to finance a pension for 5 to 10 years.

Today, the average age at which people start working is between 20 and 25. Up to the age of 60, we only count 35 years of contributions. For pensioners, life expectancy has also increased, which means that 25 to 30 years of pensions have to be financed. We have to finance more pension years with fewer contribution years.

The political leaders are therefore facing major challenges to ensure the long-term sustainability of the statutory pension system. There is no doubt that developments in this area are to be expected. To anticipate these changes and secure your retirement, you can take matters into your own hands. Several solutions exist toprepare your future and build up a useful supplement when the time comes.

Individual insurance policies such as easyLIFE Pension are a good way to reach this goal. Plus they are tax deductible, so you can benefit from tax savings each year.

Solutions for the self-employed and for companies are also available. Check with your employer whether a supplementary pension scheme exists or can be set up.

Everyone can act at their own level and according to their own means to help meet the pension challenge. Ask your agent for advice. They will be happy to help you!