Expenditures to surpass revenue by 2027, 2028 at the latest

Alain Reuter, Chairman of the National Pension Insurance Administration (CNAP), was the guest of RTL's editorial team on Thursday morning.

Reuter discussed the situation with RTL and explained that the anticipated deficit would amount to approximately €100 million more in expenditures than revenue. Although this figure might seem minor relative to the fund's annual expenditure of €8 billion, it represents a substantial financial gap. Reuter described the situation as akin to "a week's expenditure over a year" and noted that it could emerge as soon as 2027. However, he cautioned against labeling this moment as the "pension wall," which he reserved for when "the funds will be completely exhausted," referring to it instead as a "fog screen."

The 2012 pension reform includes provisions for addressing scenarios where expenditures exceed revenue, such as the adjustment moderator, which will allow for adjustments to pensions in addition to indexation. However, Reuter emphasised that these measures may be implemented too late to fully address the problem. He expressed concerns that even if the adjustment measures are introduced earlier, they might not be sufficient.

To address the looming shortfall, Reuter suggested that other expenses may need to be reduced or transferred. For instance, costs related to early retirement, reclassification, or transition allowances, which fall under labour law, could potentially be covered by alternative funds. Additionally, he states that no longer taking into account the "years of education" is not an option. Rather, he believes that the State should provide counter-financing for these years, as there is currently none.

Reuter also highlighted a growing concern about the pension system's sustainability, noting that over the next decade, the number of people applying for retirement will increase by 4.4% annually. Currently, the ratio stands at 2.4 active employees per pensioner.

Watch the full interview in Luxembourgish: