All employees and self-employed people in Luxembourg contribute to state funds for old age and invalidity pensions. Contributions are 4 percent of gross income. This is split between employee, employer and the government. Pension cover is continued if you enter unemployment or other forms of income-replacement benefit as the agency pays contributions on your behalf.
Normal retirement age in Luxembourg is 65 years of age. Early retirement is permitted at age 57 if the beneficiary has worked and paid social security benefits for forty years (480 months). It is also possible to delay claiming your pension until the age of 68. However, special conditions may apply to civil servants, miners, railway company employees and other speciality groups.
To receive a pension, you must have made contributions in Luxembourg or another European Union country for at least 120 months, or 10 years. If you reach retirement age and have not paid in the minimum months, you will not receive a pension. However, your contributions that you have made will be returned to you minus any employer contributions.
Under EU regulations you are given credit for contributions made to the state pension systems of other EU countries.
Employees of private companies must apply to the Caisse de Pensions des Employés privés in Luxembourg City a few months before reaching retirement age. It may take a few months to process the necessary paperwork and verifying any foreign contributions.
A standard pension is about 71 percent of the average salary during the years contributed. The maximum is 6,000 euros per month. The minimum benefit (after 480 months of contributions) is 890 euros per month. Payments are indexed annually for inflation and revised every second year in the light of salary trends.
To claim disability, you must have been insured (i.e. working in Luxembourg and making social security contributions) for at least 12 months during the three years immediately prior to your disability. This requirement may be waived if the disability is due to an accident or occupational illness. The criteria for disabled is simply that you be unable to practise your normal occupation.
Invalidity pension payments begin around six months after the injury or the onset of illness or when standard employer sickness benefit expires. It is paid until there's a significant improvement in your condition or you reach the age of old age pension. Those accepting benefits (under the age of 50) must agree to all recommended forms of rehabilitation.
The amount of benefit paid is based on previous income. Calculated similarly to an old age pension, there is no minimum contribution period.
Luxembourg has reciprocal social security system agreements with some non-European Union nations like the United States. This means that you will get full or partial credit for contributions made in your country if it has an agreement. Contact your nearest embassy or consulate to find out the details of your country's tax agreement with Luxembourg.
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