Luxembourg's upcoming pension reform will extend to public sector employees and gradually increase the effective retirement age, but the legal retirement threshold of 65 and current provisions for parental and study years will remain unchanged, Prime Minister Luc Frieden underscored on Wednesday.

Luxembourg's planned pension reform will also apply to public sector employees, Prime Minister Luc Frieden confirmed on Wednesday during his closing remarks in the parliamentary debate on the State of the Nation address.

The country's public and private pension systems were last aligned in 1999, following a long transitional period. Frieden emphasised that the upcoming reform will respect this historical process and assured that current pensioners and those nearing retirement will not be affected.

A key objective of the reform is to gradually raise the effective retirement age, bringing it closer to the legal threshold of 65. This adjustment will be phased in.

"We said that we would add three months per year over a certain period to the career duration requirement", Frieden explained. "If the new provision comes into force in 2030, for example, someone could still retire at 57, provided they have worked 40 years plus three months, or at 60 with the same condition. Of course, the current rules on 'baby' and 'study' years, will remain unchanged."

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Frieden acknowledged that people who are currently 45 years old may need to work two and a half to three years longer than previously anticipated. However, he pointed to demographic trends, noting that life expectancy has increased by more than 10 years over the past 50 years, and the reform does not aim to make people work proportionally longer.

Unlike in several other European countries, Luxembourg is not planning to raise the legal retirement age above 65.