Higher pension contributions to reduce Luxembourg net wages

One of the consequences of the pension reforms set out by Prime Minister Luc Frieden in early September will be a reduction in the overall net salary. 
In raising pension contributions by 0.5% of one's gross salary, the government will take a little more money each month to finance the Grand Duchy's pension system, thereby reducing the net salary.

For self-employed taxpayers, contributions will go up by 1% instead of 0.5%, as they must supply the contributions usually matched by one's employer.

Essentially, you can calculate your taxable salary by subtracting social security contributions and other deductions from the gross amount. The net salary is calculated once taxes have been deducted and any tax credits added.

Therefore, an unskilled employee on minimum wage (€2,703.74 gross as of 1 May 2025) will see their pension contributions increase from €216.29 to €229.81 each month - a €14 deduction on taxable income per month, or €168 per year. You would therefore pay less tax, and the final effect on your net salary will depend on the tax class, but will not completely offset the reduction due to additional contributions.

For someone on the qualified minimum wage of €3,244.48 per month, contributions will increase from €259.55 to €275.78 - in other terms, €16 per month, and  €192 per year.

Someone earning a gross salary of €4,000 per month would see their monthly pension contributions rise from €320 to €340 - or €240 less on the taxable income for the year.

This increase in contributions announced by the government is designed to finance the pension system for the next few years, as Luxembourg's pension fund was predicted to suffer a deficit by 2026 otherwise.However, the reform will not make it possible to balance Luxembourg pensions in the long term, and the government has estimated that new reforms will be necessary from 2030.