POLITICS & INSTITUTIONS - ECONOMY

Family benefits to be adjusted to inflation again



794101964db1550b05dc8c05f7d6c882.jpg

The government this week agreed on several changes to the allocation of family benefits. Photo: Shutterstock 

Luxembourg will reintroduce the indexation of family benefits, adjusting them to inflation as it does with wages, starting 2022. 

The government under prime minister Xavier Bettel (DP) during a weekly meeting on 12 May agreed to make good its coalition agreement promise to reintroduce the indexation of family benefits, which was stopped in 2006.

The indexation mechanism aims to adjust wages--and soon family benefits--to rising costs of living. Wages were adjusted to inflation at the start of 2020 by 2.5% with the next indexation adjustment probably not taking place until 2022, based on the current levels of inflation.

A review of family benefits will also enable parents to take advantage of parental leave in Luxembourg, even if they weren’t registered with the country’s national health service at the time of their child’s birth.

The European Court of Justice had ruled in February 2021 that excluding parents on this basis wasn’t compliant with EU law.

The government is also responding to another ECJ verdict, from 2 April 2020, which said the country shouldn’t distinguish between resident children and those of cross-border workers in its allocation of family benefits.

The new law will tie the payment of benefits to the employee working in the grand duchy--whether they live in Luxembourg or not--provided they are the legal parent of the child in question.