Preparing your retirement in Luxembourg: the 3 pillars you need to know
Skimming?
We've prepared the shortcut for you.
The 1st pillar: the state pension (CNAP)
This is the foundation. As soon as you work in Luxembourg, you automatically contribute to the Caisse nationale d'assurance pension (CNAP). Contributions represent 25,5% of your gross salary, split equally three ways: one third from you, one third from your employer, one third from the state.
Conditions for receiving your pension
The legal retirement age is 65. You can leave earlier under certain conditions:
At 60 if you can prove 480 months of mandatory insurance (40 years).
At 57 if you can prove 480 months including at least 120 months of effective mandatory insurance.
In all cases, you must have contributed at least 120 months (10 years) total across the EU, EEA, Switzerland or a country with an agreement, including at least 12 months in Luxembourg.
From 2026 onwards, it will become more difficult to retire early at the age of 60. To qualify, the length of one’s working life will need to be gradually extended: +1 month in 2026, +2 months in 2027, +4 months in 2028, +6 months in 2029, and +8 months in 2030.
How much you'll actually get (spoiler: less than you think)
Your pension is calculated based on your years of contributions and earnings. For a full 40-year career, the replacement rate is around 72% of average insurable salary. But if you've worked in several countries, you receive a partial pension from each.
The minimum pension for 40 years of contributions is approximately €2.376 gross per month (indicative amount). If you've contributed for fewer years, the amount is reduced proportionally.
In practice, if you earn well in Luxembourg, the gap between your salary and your future pension can be very significant. That's why the 2nd and 3rd pillars exist.
You can estimate your pension on the CNAP (ouvre dans un nouvel onglet) website or via a simulator like iPension.
The 2nd pillar: the company pension plan
Some employers in Luxembourg offer a supplementary pension scheme for their employees. This is the 2nd pillar. The employer pays additional contributions to build up retirement capital on your behalf.
What you need to know
This scheme is not mandatory. It's the employer's decision whether to set one up or not. If your employer offers one, you generally benefit without any action on your part.
In some cases, you can also contribute to your employer's plan yourself, up to €1,200 per year, which is also tax-deductible.
The accumulated capital is paid out at retirement, as a lump sum or annuity, depending on the plan terms.
If your employer doesn't offer one
This is the case for many companies in Luxembourg. In that situation, the 3rd pillar becomes all the more important to compensate.
The 2nd pillar isn't the only one: discover the other tax-smart savings levers.
The 3rd pillar: individual pension savings (article 111bis)
This is the pillar you control. You take out a pension life insurance contract with an insurer of your choice. You pay regular premiums (monthly or annually), and you receive the capital or an annuity when you retire.
The tax advantage: up to €4,500 deductible per year
Since 1 January 2026, you can deduct up to €4,500 per year of premiums paid into a pension savings contract (article 111bis L.I.R.) from your taxable income. This cap was €3,200 before 2026.
In practice, if you're in a 39% tax bracket, deducting €4,500 saves you around €1,755 in taxes per year. That's an immediate return, before any investment performance.
This cap applies per taxpayer, not per household. If you're in a couple and each takes out a contract, you can deduct up to €9,000 per year between you.
Conditions to meet
The contract must have a minimum term of 10 years. Capital can only be withdrawn between ages 60 and 75. If you withdraw early, you lose the tax benefit obtained in previous years.
You can subscribe from the moment you start working, and there's no age limit for opening a contract (as long as you're under 65). You can also adjust your payments, temporarily suspend them, or take out several contracts in parallel.
Who can benefit?
All Luxembourg tax residents. Cross-border workers can also benefit provided they file a tax return in Luxembourg (fiscal assimilation of non-residents, article 157ter L.I.R.).
When to start?
The earlier the better. The younger you start, the more capital you accumulate, the more you benefit from compound interest, and the more you optimise the tax advantage over time. Even €50 per month at 25 makes a real difference at 60.
A financial advisor can help you calibrate the right amount and investment profile (secure, balanced or dynamic) based on your situation. More information on the pension savings regime on the Administration des contributions directes (ouvre dans un nouvel onglet) website.
Curious how much you'd save? The 111bis simulator works out your tax saving in 2 minutes. Cross-border worker? First check your assimilation to resident status, the condition to qualify.
Frequently asked questions
For a full 40-year career in Luxembourg, the pension represents around 72% of average insurable salary. If you have a mixed career (several countries) or an incomplete one, the amount will be lower. Most experts recommend topping up with a 2nd and/or 3rd pillar.
Since 2026, the cap is €4,500 per year per taxpayer. This amount is deductible from your taxable income, regardless of your age or family situation.
Yes, provided they file a tax return in Luxembourg. Cross-border workers who opt for fiscal assimilation (article 157ter L.I.R.) have access to the same advantages as residents.
Your acquired rights at the CNAP are preserved. At retirement, you'll receive a partial Luxembourg pension proportional to your years of contributions here. Your pension savings contract remains active, but the tax advantage depends on your fiscal residence at the time of payments.
At the earliest at 60 and at the latest at 75. Any early withdrawal results in the loss of tax benefits.