The Luxembourg pension system consists of 3 pillars. The 1st consists of the statutory pension, the 2nd of a supplementary pension scheme which may be set up by the employer but which is not compulsory, and the 3rd of a personal, privately taken out provident pension contract (article 111bis L.I.R). So if you want to maintain your standard of living in retirement, you need to think about saving now.

The old-age provision contract will enable you to build up capital for retirement while benefiting from tax deductions on the premiums paid of up to EUR 3,200 per person per year (in accordance with article 111bis of the I.R.L.). You can make payments monthly or once a year. It is also possible to suspend payments if necessary. However, no repayments are possible before the age of 60 (when the contract matures), at the risk of losing the tax benefit.

A person takes out a policy and names an insured person, one or more beneficiaries (persons to whom the capital will go on the death of the insured person) and pays the premium for the policy. Payments can be made on a one-off basis or on a regular basis (monthly or annually). All or part of the savings can be repaid or surrendered at any time, depending on the terms and conditions of the contract.