Guide to retirement in Luxembourg

It is often said that you have to work in Luxembourg for at least 10 years in order to receive a pension. This is a common belief which is not true! To help you see more clearly, we have summarised the essential questions surrounding this important, and often long-awaited, moment in everyone’s life.

First of all, it’s useful to distinguish between the general scheme, which concerns private sector employees and the special scheme(and special transitional scheme for civil servants who entered service prior to 1 January 1999), which applies to public officials and officials of the municipalities and the Luxembourg National Railway Company (Société nationale des chemins de fer luxembourgeois – CFL). 

This article will discuss the specifics of the general scheme.

The Luxembourgish pension system is based on the principle of solidarity: employees who are working make contributions which support those currently in retirement. This is also known as a “pay-as-you-go” scheme. In addition to paying for the current pensions, this system provides for a “compensatory reserve”: a safety cushion which must always exceed 1.5 times the total amount of pensions paid out each year. Why? To be able to provide for difficult times such as a severe economic crisis. In 2023, the reserve was 4.25 times the amount of annual benefits, which shows the apparent good health of the current pension system in Luxembourg.

But, although these figures suggest the current situation is favourable, they mask a more concerning reality in the medium term. Even with the introduction of the 2025 reform which aimed to extend the viability of the system, the contributions will no longer be sufficient to cover all the pensions paid out from 2029 onwards, thus obliging the system to dip into its reserves. According to current projections, these reserves – however comfortable they are today – could run out by around 2048 if no supplementary measure is taken. 

In Luxembourg, the statutory age at which you can retire is 65 years. To do so, you must have worked and paid contributions for at least 10 years (120 months) in total (mandatory, continuous, optional or retroactive periods of insurance) either in Luxembourg or in another country within the European Union. You must also have worked and paid your contributions for at least 12 months in Luxembourg.

If the condition of working in Luxembourg for 12 months has not been fulfilled, you are not eligible for a Luxembourg pension.

Under certain conditions, it is possible to apply for early retirement: 

• at the age of 57, if you have worked and contributed for at least 480 months (40 years) of mandatory insurance periods;
• at the age of 60, if:
  • you have a total of 480 months (40 years) of periods to be taken into account (mandatory, continuous and/or optional insurance, periods purchased retroactively and complementary periods, as well as your study years), i.e. periods during which you have worked as an employee or self-employed person and other assimilated periods; and
  • this total includes at least 120 months (10 years) of mandatory, continuous, optional insurance or the retroactive purchase of insurance periods.

Note: when calculating the insurance history, periods of maternity leave and parental leave count as mandatory insurance periods, including for the application for early retirement.

Little dictionary of insurance periods: 

• Mandatory insurance periods: periods of professional activity, or those that are considered as such, for which you pay contributions.
• Continuous insurance periods: periods for which you can continue or supplement your pension insurance if, prior to losing your mandatory insurance (or to reducing your activity), you were insured for at least 12 months over the previous 3 years.
• Optional insurance periods: periods in which you can pay voluntary insurance contributions, if you meet certain conditions (such as residing in Luxembourg and having been affiliated previously) when you stop or reduce your professional activity for family reasons.
• Retroactive purchase periods: some periods are not covered for your pension (for example: a break or reduction in activity to look after your family, or a non-covered period after having left a foreign pension system). You can ask to make these periods count by paying contributions a posteriori (retroactively): this is called a “retroactive purchase”.

Your pension is not awarded automatically. You must apply to the National Pension Insurance Fund (Caisse nationale d’assurance pension – CNAP) yourself, and you should do so several months prior to your planned retirement date – even if you retire at the age of 65. There are different application forms according to the situation you find yourself in. 

If you are a cross-border worker, you are advised to present your request to the competent body in your country of residence. If necessary, the latter will pass your case on to the institution in the last member State whose legislation applied. 

If you have worked in several countries within the European Union during your career, including Luxembourg, in principle you can receive a pension from each of these countries. The amount of each pension will be calculated based on the duration of the period worked. This mechanism is called the principle of aggregation of insurance periods. 

Your pension amount will be calculated based on the number of years of employment completed and the contributions paid, which together make up what is known as your “insurance career”. It consists of periods covered by contributions and periods not covered by contributions, known as complementary periods (disability, studies, raising children etc.)

In Luxembourg, on 1 May 2025, the minimum monthly pension after 40 years of contributions is 2,350.89 euros gross. If this amount is not reached despite the fixed and proportional increases, you will receive a supplement.

From the age of 55, the career statement, which each worker receives each year, provides an estimated pension amount (which does not take into account any complementary periods, nor any future periods that you are yet to contribute). 

You can also ask the CNAP for an official estimate of your pension from the age of 55 onwards. However, due to the legislative amendments that are underway (see the box text on the current pension reform), the CNAP is unable to respond to requests for estimates at the moment.

In this context, LALUX is providing you with access to a smart simulator, which has been specially designed to estimate your pension. Thanks to OCR technology, all you have to do is scan your CNAP career statement to receive a personalised estimate of your pension amount in just a few seconds.

This innovative tool is a true ally in anticipating the effects of the pension reforms and adjusting your foresight strategy to ensure you can maintain your standard of living once you retire.

For the baby years, it is possible to have these periods recognised so that they are assimilated to mandatory insurance periods, under certain conditions. To do this, parents must make a joint application  to determine which of them shall benefit from those baby years, or to proceed to share them. The application can be made at the earliest when the child turns 4 years old, and at the latest at the time the pension application is submitted (it will be too late afterwards). This procedure is free. 

Another option for recognising periods during which no contributions were made is a retroactive purchase. In this case, the insured person can repurchase certain periods so that they are considered periods in which contributions were paid, by paying contributions calculated on a reference income.

The choice between these two options depends on several factors, in particular access conditions: the recognition of the baby years is only open to parents who meet strict criteria, whereas the retroactive purchase offers more flexibility but does imply a cost.

With regard to periods of study or professional training, these can also be taken into account when calculating the career in the form of complementary periods, if these were undertaken between the ages of 18 and 27. These periods cover: secondary studies, higher or university studies, adult education evening courses and mandatory internships provided for within the study programme. To be recognised, they must meet certain criteria, such as not having been compensated for them.