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Thomson Reuters Practical Law | Regulation of State and Supplementary Pension Schemes in Luxembourg: overview

A Q&A guide to pensions law in Luxembourg.
The Q&A gives a high-level overview of the regulation of national government pensions and supplementary pensions. On national government pensions, it covers employer/employee contributions; national government pension age and monthly amount; and the public pensions body. On supplementary pensions, it covers the provision of supplementary schemes; the requirements to receive vested rights and disclosure/indexing/revaluation requirements; funding and solvency requirements; pension plan investment; member transfers; the regulatory body; applicable tax reliefs on contributions and approval/registration requirements; and the tax treatment of scheme investments and payments to members. Legal protection of employees' pension rights on a business transfer, together with participation in pension schemes, employer insolvency protection and overall scheme solvency, are also included.

1. Do employers and/or employees make pension contributions to the government in your jurisdiction?

2. Where a national government pension is provided, at what age can pension payments be collected by an employee? Are there any provisions allowing for the early payment of this type of pension to an employee?

3. What is the monthly amount of the national government pension?

4. Is there a public body or agency that oversees the operation and policy of national government pension schemes? Do any other governance regimes apply to national government pension schemes?

5. Is it common (or compulsory) for employers to provide access, or contribute, to supplementary pension schemes for their employees? 

6. Where supplementary pension schemes are provided, do these schemes provide pensions, the value of which:

  • Is linked to the employee's salary (defined benefit)?
  • Is linked to employer and/or employee contributions and investment return on those contributions (defined contribution)?

7. For supplementary pensions:

  • Is there a minimum period of service before workers are entitled to receive vested rights?
  • Are there any requirements to disclose pension benefits to participants or beneficiaries?
  • Are there any legal requirements for schemes or providers to index pensions in payment and/or revalue pension rights in deferment?

8. In relation to supplementary schemes, are these generally funded or unfunded? If funded, are there any solvency requirements? Are there any legal requirements relating to how the scheme employer, trustee or provider must invest the assets of the scheme?

9. Can supplementary pension schemes hold employer stock of the plan sponsor as a plan investment? If so, are there any limitations that apply?

10. Are there any fiduciary requirements that apply to the sponsoring employer, trustee, provider or administrator of supplementary pension schemes?

11. Are there any legal requirements relating to how the scheme's sponsoring employer, trustee, provider or administrator must account for the scheme's assets and liabilities in their financial report and accounts?

12. Are there any other legal requirements for disclosure of pension scheme information to members, regulatory bodies or the public?

13. Are there any specific disclosure rules regarding environmental, social or governance requirements?

14. In relation to access for members to the funds in their supplementary pension scheme:

  • To what extent can members transfer their funds to another pension scheme?
  • How do members normally receive the benefit of their funds (for example, lump sums, income withdrawals (drawdown), life annuity arrangements)?
  • What are the legal restrictions upon access to the funds (for example, age)?
  • What are the common arrangements for early retirement and ill-health retirement?
  • Are dependants of deceased members entitled to receive benefits payable on the member's death? What form do these commonly take?

15. Is there a regulatory body that oversees the operation of supplementary pension schemes? Do any other governance regimes apply to supplementary pension schemes?

16. Are any tax reliefs available on contributions to supplementary pension schemes (by the employer and employees)?

17. Are there any approval or registration requirements with the local tax authority where a supplementary scheme is established?

18. What is the tax treatment of investments made by the scheme?

19. What is the tax treatment of pension and lump sum payments made to members?

20. Are there any other applicable tax charges on schemes?

21. Is there any legal protection of employees' pension rights on a business transfer?

22. Can the following participate in a pension scheme established by a parent company in your jurisdiction:

  • Employees who are working abroad?
  • Employees of a foreign subsidiary company?

23. Is there any protection provided for pension scheme benefits where the sponsoring employer becomes insolvent? If so, who provides the protection, and how does this operate? If the scheme itself is underfunded, are there any funding obligations on connected or associated legal entities?


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