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IPE special report May 2018

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Luxembourg government moves on second pillar pension reform

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The Luxembourg cabinet has endorsed a long-awaited pension reforms bill that aims to expand second pillar access to the self-employed.

The draft law was approved during a cabinet meeting on Friday, but has yet to be officially published.

A government advisor told IPE that the draft bill will shortly be passed by the parliament, which will publish the law in the course of this month, possibly next week. 

The main element of the proposal involves reforming the legal framework for occupational pensions to make these available for the self-employed and those in “liberal professions”, such as lawyers or notaries.

According to a statement from the cabinet, insurance companies, pension fund managers or professional associations could set up such second pillar schemes. They would have the same fiscal treatment as company schemes.

Chrystelle Veeckmans, president of the association of Luxembourg pension funds (ALFP) and partner at KPMG Luxembourg, said that the reform bill had been expected for years.

She told IPE that the extension of the complementary pension to self-employed persons was a good thing, but not much more could be said as the ALFP has not been not consulted and the text is not yet available.

The current Luxembourg government put reform of the second pillar pensions framework on its legislative agenda when it took power in 2013.

In addition to expanding second pillar pensions access, the forthcoming bill also provides for the transposition of the EU Portability Directive, which sets out certain minimum standards for the protection of mobile workers’ pension rights.

The statement from the Luxembourg cabinet noted that the directive aims to prevent constraints on the free movement of employees within the EU.

The directive was adopted in April 2014 and has to be incorporated into Member States’ national law by 21 May 2018.

The Luxembourg government has fixed a date of 1 January 2018 for its second pillar pensions reform law to enter into force.

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