Contributions are split three ways for pensions in Luxembourg between the government, the employee and the employer at 24% of the gross income for pensions in Luxembourg. Contributions are continued on your behalf by the agency while you are unemployed or on other forms of income-replacement benefit.
However, in order to claim an old age pensions in Luxembourg you must have reached the qualifying age; usually 65 while having made contributions for the set minimum time. Conditions are slightly different for civil servants, employees of railway companies, miners and certain other groups.
Under the European Unions regulations, you must receive credits for contributions made to the systems for state pensions of any other EU country. Luxembourg also has social security treaties with the United States of America. Exact terms and conditions for social security with non-EU countries can be gathered from the relevant consulate, office or embassy.
Eligibility for Pensions in Luxembourg
In order to be eligible for old age pensions within Luxembourg, at least 120 months (ten years) of contributions must have been received. If, once reaching retirement age, you haven’t made up sufficient contributions then you won’t receive a pension. Instead, the contributions you have made within Luxembourg will be returned to you, excluding any employer contributions made on your behalf.
The standard retirement age is 65, even though early retirement can be taken at 57 or 60 under certain circumstances, as long as you have made contributions to the pension pot for a minimum of 40 years (480 months).
The standard amount for pensions in Luxembourg is around 71% of an individual average salary during the years contributed (up to a maximum of €6000 a month). A minimum benefit after the aforementioned time frame is around €890 a month. Payments are indexed per annum for inflation and every second year go under a revision following the trends for salaries in Luxembourg.
Employees from private companies are required to apply to the ‘Caisse de Pensions des Employès privès’ (Office for Pensions of Employees) in Luxembourg City a few months before they actually retire, to allow processing time of the necessary paperwork alongside verification of any foreign contributions.