Pension ABC

Starting with the 1st day of activity, each employee has to be registered to the Luxembourg pension insurance scheme. Only persons exercising occasional and not habitual activities can be exempted from compulsory insurance, when the period of activity is determined in advance and does not exceed three month per year.

In terms of pension insurance there exist a general scheme (private sector employees and self-employed) and a special scheme (public sector employees). For employees who entered the public service after 1 January 1999, the conditions of entitlement and calculation of pension are almost identical.

Competent for the registration in all branches of social security is the Joint Center for Social Security (Centre Commun de la Sécurité Sociale, CCSS).

If the activity falls within the scope of the private sector, the National Pension Insurance Fund (Caisse National d’Assurance Pension, CNAP) is in charge of the entitlement and the benefits. Otherwise it is the Administration of State personnel (Administration du personnel de l’Etat, APE).

The global contribution rate is fixed at 24%.
8 % are in charge of the employee
8 % are in charge of the employer
8 % are in charge of the state

The refund of contributions is only possible if at the age of 65 the insured does not meet the conditions for the granting of an old-age pension. Only in that event the contributions paid on behalf of the insured person can be reimbursed.

According to the principal of aggregation of insurance periods, the Luxembourg insurance periods will be recognized and taken into account for the purpose of pension rights in other countries and vice versa if the person is covered by the EU regulation n°883/2004 on the coordination of social security systems or by the provisions of a social security convention concluded with third countries.

Actually Luxembourg has bilateral conventions with the following countries:
Argentina, Bosnia and Herzegovina, Brazil, Canada, Cape Verde, Chile, United States of America, India, Morocco, Macedonia, Moldova, Montenegro, Canada, Serbia, Tunisia, Turkey and Uruguay.

www.mss.public.lu/international/conventions_bilaterales/index.html

Under the pension insurance, there are no specific formalities required in the event of termination of the gainfully employment in Luxembourg.

In addition to old-age, early retirement and invalidity pensions, the National Pension Fund provides a year-end allowance and reimburses the contributions after the age of 65 in failure of fulfilling the conditions for pension entitlement.

If the beneficiary is resident in Luxembourg or resides in another country without receiving a pension from the competent institution of this country, he benefits from health insurance and care insurance under Luxembourg law.

For old-age pension, two conditions must be fulfilled:

• having reached a certain age
• having achieved a qualifying period

a) Old-age: 65
qualifying period: at least 10 years of periods of insurance

Early old-age pension:

b) from the age of 60
qualifying period: at least 40 years of periods of insurance

c) from the age of 57
qualifying period: at least 40 years of periods of employment

For invalidity pension, the qualifying period is completed if the insured person has performed at least 12 months of periods of insurance during the 3 years preceding the date of the medical recognition of invalidity.

According to the principal of aggregation (see glossary coordination) of insurance periods, the Luxembourg insurance periods will be recognized and taken into account for the purpose of pension rights in other countries and vice versa if the person is covered by the EU regulation n°883/2004 on the coordination of social security systems or by the provisions of a social security convention concluded with third countries.

Actually Luxembourg has bilateral conventions with the following countries:
Argentina, Bosnia and Herzegovina, Brazil, Canada, Cape Verde, Chile, United States of America, India, Morocco, Macedonia, Moldova, Montenegro, Canada, Serbia, Tunisia, Turkey and Uruguay.

www.mss.public.lu/international/conventions_bilaterales/index.html

It is possible to contract a voluntary pension insurance to fulfil the qualifying conditions set by the legislation in order to have the right to receive a pension.

The amount of pensions paid by pension funds of the first pillar is difficult to quantify. The amount depends on the number of years of insurance and especially the level of pensionable income. The pension formula includes fixed-rate allowance depending on the number of years of insurance and proportional allowance based on the total pensionable income during the contributory insurance career.

For old age pension, two conditions must be fulfilled:

• having reached a certain age
• having achieved a qualifying period

a) Old-age: 65
qualifying period: at least 10 years of periods of insurance

Early old age pension:

b) from the age of 60
qualifying period: at least 40 years of periods of insurance

c) from the age of 57
qualifying period : at least 40 years of periods of employment

For invalidity pension, the qualifying period is completed if the insured person has performed at least 12 months of periods of insurance during the 3 years preceding the date of the medical recognition of invalidity.

It is recommended to enquire about entitlements after having reached the age of 55.

In principle, the pension claim has to be submitted to the local pension office which will forward it to the Luxembourg pension fund. Under some circumstances, the claim can directly be presented to the Luxembourg pension fund.

Caisse nationale d'assurance pension
L-2096 Luxemburg

Old age pensions are unaffected by working activities in general.

Old age pensions are unaffected by working activities in general. Early old age pensions can be reduced or stopped if a certain ceiling of income is exceeded.

Invalidity pensions are withdrawn if the beneficiary no longer meets the medical conditions of invalidity or has taken a professional activity whose income, averaged over a calendar year, exceeds one third of the minimum wage (actually 7.206 €).

Luxembourg pensions are completely and with no restriction of amount exported to any country in the world and transferred to a bank account to be specified by the pensioner.