The question of a potential pension reform is at the heart of political discussions in Luxembourg. The last reform in 2012 already brought significant reductions to current and future pensions. Would another reduction in pensions be a good solution?

A Future Without Precarity: An Urgency

The poverty rate among retirees has more than doubled in ten years in Luxembourg, now standing at 10.7%. The current minimum pension of €2,245 gross per month for a full 40-year career is well below the poverty threshold, so it would be wiser to increase the lowest pensions rather than reduce them.

2012 Reform: A Systematic Degradation

The 2012 reform lowered future pension levels by changing the calculation formula, questioning the end-of year allowance, and slowing the adjustment of pensions to wage growth. It would be fairer to maintain full adjustment of pensions to wage growth because, for the average retiree, the annual loss in adjustment can represent a decrease of €100,000 over the entire duration of their retirement. The end-of-year allowance of €960 gross for a person with a 40-year career is modest but crucial for low-income retirees. Removing it would be a mistake, as it provides vital support to the most vulnerable pensioners.

Opening the Debate Transparently

It is important to clarify the facts: pensions in the general scheme are not excessive: only 4.19% of pensions exceed €6,000 gross per month, and 0.14% exceed €8,000. Nearly 23% of residents receive a pension of less than €2,000 gross per month. The 2012 reform has penalized younger generations, who will already receive lower pensions: an average employee could lose around €380,000 over the total duration of their retirement.

Strengthening the Pension System

The argument that a quick reform is needed due to an imminent financial crisis is unfounded. The Pension Fund (CNAP) has more than €27 billion in reserves, enough to pay pensions for 4.3 years without contributions—reserves much higher than those in Germany or France.

Fairer Solutions Exist

In the face of an ageing population and increasing pension expenses, fairer solutions exist. Rather than cutting benefits, it would make sense to use the accumulated reserves to finance pensions in the short term. Luxembourg's economic growth also makes it possible to consider sustainable financing without needing to reduce elsewhere. The Chamber of Employees (CSL) believes that the increase in pension expenses due to demographic ageing is inevitable, but it should not be seen as a threat. It is better to increase system revenue than to reduce benefits, ensuring decent pensions for all.

The CSL aims to defend the interests of the 630,000 employees, retirees, apprentices, and job seekers, whether cross-border workers or residents. For more information: CSL.lu

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