In 2023, the Civil Service Pension Fund disbursed a staggering €1.2 billion to cover the pensions of civil servants, marking a fivefold increase since 1999.

Over the span of 24 years, expenditures surged from €245 million to €1.2 billion, illustrating the substantial financial strain faced by the Luxembourg Civil Service Pension Fund. Forecasts from the Ministry, helmed by Serge Wilmes, suggest that the situation is unlikely to change any time soon.

In fact, the number of pensioners is projected to continue rising, accompanied by a subsequent increase in state expenditure. For some time now, the fund has been unable to meet this financial burden.

Minister for the Civil Service Serge Wilmes acknowledges the fund's dire financial situation, noting its lack of reserves and the longstanding practice of state intervention to cover expenses. Indeed, the latest State budget, unveiled by the new government, earmarks funds to address these escalating pension costs.

The current revenue generated by active civil servants clearly falls short of meeting the Pension Fund's financial obligations. In 2024, the Luxembourg government anticipates disbursing over €900 million to maintain the fund's balance, with projections indicating a further upward trajectory in expenses.

With 13,944 pensioners currently on record, estimates suggest this number will surpass 15,000 by 2027, necessitating a corresponding increase in state contributions. By 2026, the Luxembourg State's financial commitment to civil servants' pensions is projected to exceed €1 billion.

Billion-euro mark already reached

Established in 1999, the Civil Service Pension Fund introduced specialised pension schemes catering not only to civil servants but also extending benefits to municipal civil servants and employees of the Luxembourg National Railway Company (CFL).

In its inaugural year, the fund disbursed €245 million to cover pension obligations. Over the subsequent decade, expenditures more than doubled, reaching €495 million by 2009. This upward trajectory persisted, with spending climbing to €897 million in 2019. Finally, in 2021, the fund crossed the milestone of €1 billion in expenditures.

Projections outlined in the multiannual budget indicate a further surge in spending, expected to reach €1.493 billion by 2027. Should these forecasts materialise, the State will need to contribute €1.1 billion to bridge the gap in civil service revenue. This contribution accounts for 74% of the total budget earmarked for civil service pension payments.