Work longer or receive a smaller pension

Luxembourg's retirement age will not be extended as part of the new national pension shake-up, health minister Mars di Bartolomeo has assured residents.

The minister said that the social security reform is aimed at securing the future of pension schemes, however, this will not come at the cost of a longer working life.

The current age of retirement from 57 to 60 for early retirees and 65 years old for the rest of the working population, will remain unchanged.

However, under the proposed reform, there will be an incentive for employees to work longer. The principle of working longer or accepting a smaller pension payout is at the heart of Mr Di Bartolomeo's “pact of age” plan. The scheme, he says, will encourage employment of people in their senior years.

“We will also conduct a system check every seven years. If the expenses prove higher than revenues, we will reverse the adjustment and allocation at the end of the year and increase contributions," the minister said.

The proposal has attracted criticism. Green party deputy Felix Braz said that the new system would require an outlay larger than the additional revenue it would generate. Fellow Green deputy Serge Urbany says that it may affect productivity levels.

The Democrats say the reform is acceptable but expressed concern it would not achieve its goal to generate more revenues for the pension pot.