A growing debate on pension disparities highlights the significant gap between the high pensions received by civil servants and those in the general pension scheme, raising questions about fairness and future reforms.

A significant portion of retirees from special pension schemes, including civil servants and state and municipal employees, receive pensions exceeding €8,000 per month.

Michel Reckinger, president of the Luxembourg Employers' Association (UEL), recently questioned why the general public should bear the cost of these high pensions. He highlighted concerns about fairness, particularly in light of current discussions focusing on the general pension scheme for employees and the National Pension Insurance Fund (CNAP).

According to figures from the General Inspectorate of Social Security (IGSS), over a third of retirees in special schemes, which include civil servants, state and municipal employees, as well as statutory staff of the Luxembourg National Railway Company (CFL), receive pensions of more than €8,000 a month. In contrast, only 0.6% of retirees in the general pension scheme attain such high amounts.

© RTL
© RTL
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The five-sixths pension scheme for civil servants was abolished with the 1999 reform. Previously, civil servants could receive a pension equal to five-sixths of their final salary, which is typically the highest at the end of their careers. Following the reform, new public servants from 1998 onward were placed under a special scheme with pension calculation rules similar to those for employees.

For those employed in the public sector before the reform, a transitional regime was established. While they no longer automatically receive the five-sixths pension, they can increase their replacement rate by extending their service, up to the equivalent of the previous five-sixths pension.

The significant disparities in pension amounts can be attributed to the transitional regime that continues to affect current pensions, despite the application of similar rules in the special scheme. Alain Wiltzius from the Ministry of the Civil Service, which administers state pensions, notes that out of over 13,000 pensions, less than 6% are governed by the provisions of the special scheme. This is because those subject to the less favourable terms of the special scheme are still actively working. The reform primarily affects future pensioners, with a political consensus ensuring that no one will lose the pension rights they have already "saved up."

As these current civil servants retire, the gap between civil servant and general pensions is expected to narrow. Nonetheless, civil servants' pensions will likely remain higher due to their typically higher earnings and corresponding social contributions over their careers.

In 2023, the CNAP spent approximately €6.4 billion on over 220,000 pensions under the general regime. In contrast, the 21,000 pensions from special schemes, according to the information our colleagues from RTL Radio obtained from the CFL, the Pension Fund for Civil Servants and Municipal Employees (CPFEC), and the Ministry of the Civil Service, totalled around €1.6 billion.

The last pension reform of the general regime in 2012 was applied equally to the special regime. When asked about the application of future reforms, Minister of Social Security Martine Deprez acknowledged this precedent but did not provide specifics on whether future reforms would follow the same approach.