While Luxembourg's pension reserve continues to grow, forecasts suggest the fund will soon be under pressure.

Luxembourg's pension reserve continues to expand, yet forecasts suggest it will soon face significant pressure. This issue lies at the heart of the ongoing debate over pension reform, as policymakers seek to ensure the long-term sustainability of the country's pension system.

In 2023, the National Pension Insurance Fund (CNAP) reported a healthy balance, with 499,356 contributors funding 220,137 pensions. Contributions currently outpace expenditures, reflecting the system's robust performance. In 2023, the surplus added nearly €2.8 billion to the reserve, bringing the total safety cushion to €27.3 billion. These funds are managed by a compensation fund and strategically invested.

However, the latest report from the General Inspectorate of Social Security (IGSS) paints a less optimistic picture for the future. Starting in 2026, pension expenditures are projected to exceed contributions, forcing the country to draw on its reserves. If no reforms are implemented, the €27.3 billion reserve could be depleted by 2045.

Despite the looming challenges, the Chamber of Employees emphasises the current strength of the pension system. "With a reserve of €27 billion, the Luxembourg Pension Fund is doing well", the Chamber stated, opposing reforms that would reduce pension amounts or raise the retirement age. To illustrate the reserve's scale, even if contributions ceased entirely, Luxembourg could cover all pension payments for four years and three months using the existing reserve alone. While this scenario is hypothetical, it underscores the substantial savings accumulated by the country.

The future of the pension reserve will be a key topic during a major parliamentary debate on pensions scheduled for the week of 17 March.