Luxembourg’s pension system is divided into three pillars. The first pillar, the statutory pension, is based on an allocation system in which the contributions made by the current working population finance the pensions of today. A generous model built on solidarity that has worked magnificently, but which unfortunately must adapt to a new reality.

The projections are unequivocal: from 2027 onwards, the amount of pensions paid out will exceed the contributions received. The reserve accumulated over the years will start to diminish, until its estimated depletion in 2047. A profound reform is therefore inevitable, however no one knows exactly what form it will take or when it will be implemented.

One thing is certain: the longer the reform is postponed, the greater the necessary adjustments will be. Rather than waiting and enduring these changes, you can regain control of your financial future starting today.

With a retirement plan such as easyLIFE Pension, you gradually build up retirement capital suited to your budget. The principle is simple and flexible:

• Manageable instalments: from €25 per month, adjustable according to your situation

• Immediate tax benefits: a tax reduction of up to 45% of the saved amount, depending on your marginal rate

• Choice of investment: Security formula with guaranteed capital or Performance formula linked to funds with a potentially higher return

• Flexibility upon maturity: Payout in the form of a capital lump sum or an annuity

In concrete terms, each euro invested in your pension savings indeed costs you much less thanks to the tax deduction provided for in Article 111bis LIR (Income Tax Law). The equivalent of eating out at a restaurant once a month, i.e. €50, can transform into a significant investment for your future, even more so since the tax benefits considerably reduce the real cost of this saving.

The second pillar, comprised of supplementary pension schemes, remains grossly under-exploited in Luxembourg. And yet, it offers remarkable tax benefits for employers, employees and the self-employed. 

Solutions such as lalux-Staff Protect  allow employers to offer complete protection that not only covers retirement, but also the risk of death or disability, all within a very advantageous tax framework. In a competitive employment market, this is a strong argument for attracting and retaining talent.

If your employer offers a supplementary pension scheme in place, you can add to it with personal contributionsof up to €1,200 per year. These contributions directly reduce your taxable income each month. You will not pay tax on this money today, and the benefits will be exempt from tax when paid out. A particularly attractive double tax optimisation.

lalux-Safe Future opens up the same opportunities to the self-employed. You can invest up to 20% of your net annual income at a fixed tax rate of 20.9% when it is paid in, and with tax exemption when the benefits are paid.

Planning for a peaceful retirement requires a structured approach that cleverly combines the different pillars available.

Check whether your employer offers a supplementary pension scheme and supplement it with personal contributions to benefit from an immediate reduction in the amount of tax you pay each month. If you are self-employed, set up your own pension scheme according to your financial capacity. This is the most advantageous tax lever in the short term.

Sign up to a retirement plan such as easyLIFE Pension with a monthly savings amount that’s compatible with your budget. Even if you start with a modest amount, these regular savings, augmented by tax benefits, will systematically build your retirement capital over the long term.

The earlier you start, the smaller the necessary monthly contributions will be, and the more time will work to your advantage. The statutory pension system will continue to form the basis for your pension, but by diversifying your sources of income, you can guard yourself against future reforms.

One of the main advantages of pension savings in Luxembourg comes from tax benefits. But, in concrete terms, how much can you save?

That depends on several factors: your taxable income, your family situation and your marginal tax rate. To give you a precise idea of your potential savings, LALUX offers a free online simulator. In just a few clicks, you can get a personalised estimation of your annual tax benefits.

Also, don't hesitate to contact your LALUX agent for personalised advice adapted to your specific situation.

Political debates on the pension reform will continue, projections will evolve, but one thing won't change: your ability to act starting today. The current tax advantages are concrete, immediate and generous. They represent a real opportunity to prepare for your future while optimising your taxation.

Whatever form the reform will take, and whenever it will be implemented, you will have made the choice to take advance action rather than to wait. Your retirement story is being written right now.