RTL Today - Pensions in Luxembourg: Pensioners receive higher income than national average

According to the latest OECD figures, the total income received by pensioners in Luxembourg – whether from work or capital – surpasses the average income of the population as a whole.

In the European Union, significant disparities exist in the financial well-being of retirees across member states. While some enjoy relative comfort, others face much harsher realities. For instance, the average pension in Luxembourg is €2,398, compared to just €293 in Bulgaria. However, comparing these gross figures is not particularly meaningful, as they fail to account for the vastly different costs of living between countries.

To provide a clearer picture, several indicators measure retirees' financial means relative to the national population. According to the OECD's (Organisation for Economic Co-operation and Development) overview, retirees' total income as a percentage of the national average income is one such indicator.

In France, for example, people aged 65 and over receive 99.8% of the income of the general population, aligning closely with the national average. In Luxembourg, however, retirees fare exceptionally well, with an income equivalent to 110.1% of the national average, making Luxembourg one of only two European countries where pensioners earn more than the average population. The other is Italy, where the over-65s earn 103% of the national average.

Revenus plus de 65 ans
Infogram

In contrast, pensioners in Germany earn 88.8% of the average income, while in Belgium, this figure drops to 77.7%. The situation is even more precarious in Lithuania and Estonia, where pensioners earn just 67.4% and 69%, respectively, of the national average.

Replacement rate

Another key indicator for assessing retirees' standard of living is the replacement rate – the percentage of a person's former income they receive upon retirement. By this measure, Luxembourg retirees rank among the best in Europe, according to the OECD.

At the top of the list is Portugal, where retirees in 2022 received pensions equivalent to 98.8% of their pre-retirement income. Following closely are the Netherlands (93.2%), Greece (90%), Austria (87.4%), and Luxembourg (86.9%).

Taux de remplacement net pensions
Infogram

In comparison, neighbouring countries fare less well. France has a replacement rate of 71.9%, Belgium 60.9%, and Germany just 55.3%, highlighting greater income drops upon retirement.

At the bottom of the spectrum are pensioners in the Baltic States, where financial struggles in retirement are most pronounced. Lithuania has the lowest replacement rate in the EU at just 28.9%, followed by Estonia at 34.4%.