“Luxembourg has a fairly effective welfare system, but it is important to continue to adapt it to the needs of the target populations in times of economic difficulties and inflationary pressures,” said (DP), presenting the new rules for the cost-of-living allowance on Friday. “But above all, as a government, we must ensure that existing benefits reach the households that need them, in particular through administrative simplification.”
The measures had already been mentioned at (CSV) in June.
What will change for the cost-of-living allowance (AVC) in 2025?
—It will be increased by 10%. In concrete terms, a one-person household with a maximum gross monthly income of less than €2,710 will receive annual assistance of €1,817, compared with €1,652 at present. A two-person household with a gross monthly income of less than €4,065 will receive €2,272 instead of €2,065. A four-person household with a gross monthly income of up to €5,692 will receive €3,473 instead of €3,182.
—The AVC will now be paid automatically to recipients of the inclusion allowance. The same will apply to the energy subsidies presented by Hahn on 17 June.
—With the aim of combating the non-use of municipal social benefits, the National Solidarity Fund will now provide municipalities with the details of AVC recipients residing in their areas, so that municipalities can also introduce automatic payment of municipal benefits modelled on the cost-of-living allowance.
More flexible procedures
The criteria for receiving the AVC have been modified to extend the number of beneficiaries.
—The deadline for submitting an application has been extended from 31 October to 31 December. And from now on, a claimant who has had an initial application rejected will be able to make a second application within the year. “Until now, this was not possible,” explains Hahn, “which meant that people whose applications had been rejected because they did not meet the conditions--but who could [soon after] meet them--were excluded.”
—The period of residence required to qualify for AVC has been reduced from 12 to three months. This will also be the case for claiming the energy allowance.
—Allowances or benefits paid by a public or private body will no longer be taken into account as income when determining entitlement to benefits. This was already the case for family allowances. This will now apply to interest subsidies, rent subsidies and aid from charities.
—And finally, regarding young workers who are staying at home for longer and longer because they cannot access affordable housing, their professional income will no longer be taken into account when determining entitlement to benefits.
Significant gains for households
The National Solidarity Fund, in collaboration with the ministry of family affairs, solidarity, living together and reception of refugees, has posted on its website to determine eligibility. With the aim being to ease access to social benefits, recipients will receive a pre-filled form on which to make their claim.
Including the increase in AVC and the energy bonuses announced in June, households could save a total of €2,417 for one person and up to €4,232 for a household of four.
This article in French.