Pensions: record cost of 6.8 billion euros in Luxembourg in 2024

At the end of 2024, Luxembourg paid 231,886 pensions to 117 different countries, or 37.37% more than ten years ago. “The increase in the number of pensions is a consequence of demographic development and the high proportion of international careers,” explains the National Pension Insurance Fund (CNAP) in its annual report. Most of the services concern pensions for age reasons, to which are added disability and survival pensions.

The system thus reaches new heights and now costs 6.8 billion euros per year. In 2005, expenses still amounted to just over 2.1 billion euros, which corresponded to a triple in 20 years. Despite the increase in expenses, “the general pension system reserve amounts to 30.67 billion euros on December 31, 2024”. This represents 11.98%.

According to data, the retirement reserve is therefore still enough for 4.39 years of expenses, and the pressure on the system increases. “The load coefficient, (which indicates the relationship between retirees and contributors), was 44.7% in 2024,” reports the CNAP. So almost a retiree for two contributors, or nearly 45 retirees for 100 active ingredients. At the same time, the contribution rate, that is to say the relationship between spending and contributions revenue, increased to 23.11%. It is therefore slightly lower than the contribution rate of 24%.

This development explains why the theme of pensions dominates the political agenda in Luxembourg for months. Prime Minister, Luc Frieden (CSV), announced in his speech on the state of the nation that he would extend the duration of professional career – currently 40 years – one quarter per year. Deputy Prime Minister, Xavier Bettel (DP), also mentioned a possible increase in contributions.

“51.6 % of pensions were paid to non-resident retirees,” said the CNAP. This concerns more than 115,000 cases, mainly in neighboring countries. Virements abroad now represent 33% of total expenses, or 2.25 billion euros. In 2005, this share was still 18%. The reason would be the high number of cross -border workers who work for many years in Luxembourg, but who return to their country of retired origin.

The international dimension of professional careers is also characteristic of Luxembourg. “60.8% of retirees have a mixed insurance career”, that is to say periods of contribution in several countries, while 39.2% worked exclusively in Luxembourg.