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 purchase 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: 

• From the age of 57, if you have worked and contributed for at least 480 months (40 years) of mandatory insurance periods;

• If you do not reach 40 years of mandatory insurance periods, you may take into account other insurance periods.

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 and you have worked outside Luxembourg, 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 only worked in Luxembourg, submit your application directly to the CNAP.

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 upon reaching the pension age set by those 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 complementary periods.

In Luxembourg, on 1 June 2026, the minimum monthly pension after 40 years of contributions is €2,436.04 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 include 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. 

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.

Baby years 

Including "baby years" allows for the inclusion of a fictitious income during periods dedicated to periods spent raising children in the calculation of parents' pensions. It is not necessary to qualify for this benefit. If a person stops working, these years are added to the mandatory periods used to calculate career duration.

To benefit from the baby years this, parents must make a joint application to determine which of them shall benefit from them, 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.

Retroactive purchase

To recognise periods during which no contributions were made, 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.

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.