As indicated by a recent consultation by the Idea Foundation, incentivising working individuals to "work for longer" seems to be the preferred approach to safeguard the sustainability of Luxembourg's pension system.

At the beginning of this year, the Idea Foundation engaged with approximately a hundred political and economic decision-makers, social partners, and economists to address the challenging topic of pensions in Luxembourg. The consensus revealed that 73% of the panelists believe that, within the next three years, urgent reform is necessary.

The primary concern behind this suggestion is the projected imbalance between pension fund revenues and expenditures. This tipping point is anticipated to occur in 2027 and according to the latest estimates, stocks are expected to be depleted by 2042.

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The panel of experts underscored the imperative for urgent reform. Their sentiments were echoed by the Minister for Social Security, who emphasised that it would be "irresponsible to not do anything".

As part of its consultation process, the Idea Foundation has provided suggested "levers to activate", or various avenues, to address the pension system's challenges. The outcome of this consultation is anticipated to be unwelcome news for young people. The favoured approach by three-quarters of respondents is to encourage individuals to "work for longer", scoring 3.7 out of 5.

The next suggested approach involves a gradual reduction in the level of "certain pensions in relation to salary income", scoring 3.2 out of 5. The Idea Foundation highlights that this option garnered "more differing opinions" among participants in the consultation.

The level of support for compliance with the 2012 reform, which incorporates automatic mechanisms for correcting imbalances, was also assessed. This option received 52% support, with a score of 2.7 out of 5. Additionally, increasing social security contributions received the least approval, with a score of 2.5 out of 5.

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This shows that, to secure consensus, it may be necessary to explore various avenues. While a definitive plan has yet to be established, it's clear that the notion of working longer may not be universally welcomed.