As of 31 December 2023, more than half of Luxembourg’s pensions were transferred outside the grand duchy, according to the latest data from the General Inspectorate of Social Security (IGSS). The figures highlight a growing trend of pensioners relocating beyond the country’s borders, raising questions about cost-of-living dynamics and financial security in retirement.

Pension exodus

According to the IGSS, a division of the ministry of health and social security, a total of 220,137 pensions were disbursed in December 2023. Of these, 111,960--representing nearly 51%--were transferred to pensioners residing outside Luxembourg.

Of these nearly 112,000 non-resident pensioners, a significant proportion remain in neighbouring countries, with France (35.2%) leading the way, followed by Germany (22.4%) and Belgium (18.7%). Beyond the immediate region, pensioners also settled in Portugal (8.6%), Italy (7.3%) and Spain (2.2%)--suggesting a preference for countries with lower living costs and favourable retirement conditions.

While over half of pensioners live outside Luxembourg, their pensions only accounted for only a third (31.7%) of the total pension expenditure. The disparity suggests that non-resident pensioners receive lower average payouts compared to those still living in the country--a key indicator that cost-of-living differences might be driving relocation decisions.

The trend is particularly striking when viewed over time. In 2000, only 16% of pension payments were sent abroad. By 2023, that figure had nearly doubled to 31.7%, reflecting both Luxembourg’s historically mobile workforce and the financial benefits of retiring elsewhere.

Pension benefits

By the end of 2023, the average pension amounted to €2,398.27. Old-age and early old-age pensions averaged €2,643.95, while survivor pensions stood at €1,802.06 for spouses and €684.15 for orphans.

Interestingly, pensions for Luxembourg residents remained notably higher. While IGSS does not disclose averages for non-residents, resident pensioners received an average of €3,325.97 in December 2023. Old-age and early old-age pensions stood at €3,673.75, with survivor pensions reaching €2,624.11 for spouses and €852.51 for orphans. Gender disparities remained persistent across all pension categories.

The average age of old-age pensioners was 65, while early old-age pensioners had an average age of 60. Given Luxembourg’s high cost of living and the growing trend of retirees relocating to neighbouring or southern European countries, pension transfers abroad are expected to keep increasing, bringing socio-demographic challenges that may concern policymakers.