Supplementary pension in Luxembourg: employer, 111bis, life insurance
Skimming?
We've prepared the shortcut for you.
This is for you if
You know your CNAP pension will be lower than your salary and you want to close the gap.
Your employer mentions a pension plan and you do not know what is in it.
You are torn between a 111bis contract and life insurance.
You are self-employed and looking for a way to prepare your retirement.
you want to know how the statutory CNAP pension is calculated: this guide is about what comes on top.
Your employer's supplementary scheme (2nd pillar)
What it is. A supplementary pension scheme (RCP) is set up in a professional context. It pays benefits in case of retirement, death, invalidity or survivorship, on top of social security. Setting one up is optional: not all employees have one (Guichet.lu (ouvre dans un nouvel onglet)). The legal framework is the amended law of 8 June 1999, and the Inspection générale de la sécurité sociale (IGSS) supervises it (IGSS (ouvre dans un nouvel onglet)).
Self-employed? Since 1 January 2019, supplementary schemes have also been open to the self-employed (IGSS (ouvre dans un nouvel onglet)), through schemes approved by the IGSS. These schemes also take in the rights of former employees who cannot stay in their former employer's scheme (Guichet.lu (ouvre dans un nouvel onglet)).
See what you already have. In your MyGuichet.lu private space, the "Pension complémentaire" service shows you, among other things: the employers you are affiliated with, the scheme manager, your covers (old age, death, invalidity), the date from which your rights are vested, the annual contribution paid and the amount of your savings. You need LuxTrust, a Luxembourg eID card or an eIDAS means from another European country. Only data for the 2022 financial year onwards appears there, and the IGSS does not guarantee its accuracy: if something does not add up, contact the plan manager (Guichet.lu (ouvre dans un nouvel onglet)).
On the tax side. If your scheme provides for personal contributions, you can deduct them from your taxable income up to 1,200 € per year. If you are self-employed, your retirement contributions are deductible up to 20% of the sum of your net income (ACD (ouvre dans un nouvel onglet)).
The 111bis old-age savings contract (3rd pillar)
This is retirement savings you open yourself, with payments deductible from your taxable income as special expenses. To be deductible, the contract must (Guichet.lu (ouvre dans un nouvel onglet)):
- be taken out with an insurance company or credit institution approved in Luxembourg, or approved in another EU State and authorised to operate in Luxembourg;
- be taken out no later than the day before your 65th birthday, and last at least 10 years;
- pay out the savings no earlier than 60 and no later than 75;
- exclude early repayment, except in case of serious illness or invalidity;
- pay out as a lump sum, a monthly life annuity, annual withdrawals, or a combination of these.
An early withdrawal is taxed at the normal rate on the whole amount repaid. The deduction ceiling is individual: each spouse who has a contract has their own, and it only counts once per person, however many contracts they have.
Cross-border worker? You can only deduct these payments if you have chosen to be taxed as a resident, and are entitled to it. See our page on tax assimilation.
The current ceiling and how to declare it are in our guide 111bis old-age savings. The real saving depends on your tax rate: that is exactly what our simulator calculates.
Life insurance
Life insurance can serve two purposes: protecting your loved ones (a lump sum paid if you die) and saving (a lump sum or an annuity if you are alive at maturity). On the tax side, the Administration des contributions directes (ACD) classes its premiums as special expenses (ACD (ouvre dans un nouvel onglet)):
- the company must be approved in Luxembourg, or approved and established in another EU State;
- a contract that guarantees a lump sum on survival must last at least 10 years, and its premiums must be calculated actuarially on the insured person;
- these premiums share an annual ceiling of 672 € with other insurance (death, accident, invalidity, sickness, civil liability) and interest on personal loans. This ceiling is increased by the same amount for your spouse or partner taxed jointly with you, and for each child for whom you get a tax reduction.
Careful: 672 € is what you can deduct from your taxable income, not what you save. The saving depends on your tax rate.
111bis or life insurance? The rules are not the same: the 111bis has its own, higher ceiling, but your money is locked in until at least 60. Life insurance is deducted within the shared ceiling, and can also cover death. The two are not mutually exclusive. If you want an opinion on your situation, get a call back from an advisor.
How to choose: the questions to ask
To your employer or HR, about the supplementary scheme:
- Is there a pension plan, and from when am I affiliated?
- Who pays what: the company alone, or me too?
- Which covers: retirement only, or death and invalidity as well?
- From when are my rights vested, and what happens to them if I leave?
To the advisor, about a 111bis or life insurance:
- Does the contract meet the deduction conditions (term, payout age, approval)?
- What are the fees, at the start and each year?
- Where is the money invested, and what is guaranteed?
- Lump sum, annuity, or both at maturity?
- What happens if I stop paying in, or if I leave Luxembourg?
Ask for the answers in writing. And always compare based on your own situation: your tax rate, your age, your time horizon.
In case of a dispute with an insurer, the Commissariat aux assurances (CAA) offers free amicable resolution. You must first have complained in writing to the insurer, with no satisfactory answer within 90 days, and refer the matter to the CAA within a year of your complaint (CAA (ouvre dans un nouvel onglet)).
Your to-do, in 4 steps
Practical guide · trigger.lu
Supplementary pension in Luxembourg: employer, 111bis, life insurance
- Where
- MyGuichet.lu, private space
- Service
- Pension complémentaire
- You need
- LuxTrust, eID or eIDAS
Details
No scheme shown? Ask HR whether your company has one.
- Tool
- trigger retirement simulator
Details
You see how much a 111bis payment saves you depending on your income.
- Key points
- fees, guarantees, exit
- Conditions
- 10 years minimum, 60 to 75
Details
Ask the questions from the section above, and get the answers in writing.
- Document
- certificate from the insurer or bank
- Where
- tax return or annual adjustment
Details
If you are a resident, you can also have them entered on your tax withholding card during the year.
Common mistakes
Ignoring your employer's plan.
It is optional, but if it exists, it is often the first building block to know about.
Confusing deduction and saving.
A deduction ceiling is not an amount of tax saved.
Signing a 111bis without looking at the term.
Your money is locked in for at least 10 years and until age 60, except in case of serious illness or invalidity.
Counting on the deduction as a cross-border worker without assimilation.
Without being taxed as a resident, 111bis payments are not deductible.
Comparing contracts on the advertised return alone.
Fees and guarantees matter just as much.
Frequently asked questions
It is everything that comes on top of your statutory CNAP pension: your employer's supplementary scheme (2nd pillar), and your personal savings, such as the 111bis old-age savings contract or life insurance (3rd pillar).
Log in to your MyGuichet.lu private space, "Pension complémentaire" service: it lists your affiliations, your covers and your savings, for data from 2022 onwards. Otherwise, ask your HR.
Yes, under conditions: an approved company, a term of at least 10 years for a contract that guarantees a lump sum on survival. The premiums fall within an annual ceiling of 672 € per person, increased for your spouse taxed jointly with you and for each child.
The 111bis has its own deduction ceiling but locks your savings in until at least 60. Life insurance is deducted within a shared ceiling and can also protect your loved ones. The right choice depends on your age, your tax rate and your family.
Yes. Since 2019, the self-employed have had access to supplementary schemes approved by the IGSS, and their retirement contributions are deductible up to 20% of their net income.
Only if you have chosen to be taxed as a resident and are entitled to it.