What future for our Luxembourgish pension system?

On September 22nd, 2023, the Pensioners’ Department of the OGBL invited its members to a meeting to present its analyses, demands and proposals for defending, consolidating and improving our pension system for current and future retirees. About 150 people attended the meeting held in the large meeting room of the Maison du Peuple in Esch-sur-Alzette.

Sylvain Hoffmann, Director of the Chambre des salariés (CSL), gave a critical presentation of the latest technical evaluation of the general pension scheme by the Inspection générale de la Sécurité sociale (IGSS).

In his speech, Jean-Claude Reding, vice-president of the CSL and former president of the OGBL, pointed out that our pension system still needs to be improved, particularly for people receiving small pensions – the majority of whom are women – who are finding it increasingly difficult to cope with the rising cost of living. The risk of poverty is also increasing for many pensioners. Fairer taxation and a structural increase in the minimum pension are essential.

The speaker also recalled that the 2012 reform, which was unfortunately passed by a large majority in the Chamber of Deputies at the time, enshrined a significant reduction in future pensions. Under the 2012 law, those retiring in 2052 will receive a 13% lower pension. Even working longer, if you can, won’t make much of a difference. Today’s young people, faced with difficult living and working conditions, were the real losers of the government’s reform at the time, despite the warnings and constructive proposals of the trade union movement at the time.

Jean-Claude Reding stressed the need for a reform of the 2012 law, particularly in the interests of young people, and presented the proposals of the OGBL and the CSL in this regard.

A reform is also needed to avoid the automatic worsening of pensions by reducing the adjustment factor and abolishing the end-of-year supplement if the current contribution rate proves insufficient to maintain the financial balance of the system. The CSL has drafted a bill to prevent such automatic deterioration, but the government has not submitted it to the Chamber of Deputies.

It’s difficult to predict the future, especially over a long period of time, and it’s best to err on the side of caution. Under the current legislation alone, a reduction in benefits is inevitable when the current means of financing the system – contributions on work – are no longer sufficient to guarantee the system’s benefits. What is needed is a reform based on alternative means of financing, complementary to the current system of financing, which would make it possible to consolidate the system, maintain the level of benefits, improve the situation of those who receive small pensions, especially women, make it fairer for workers who perform arduous tasks and who therefore risk a shorter life expectancy, especially in good health, and make it fairer for young people who must be able to count on the social security system to guarantee them at least the level of social protection that their parents enjoyed.

There are proposals for a fair and sustainable reform, but we must choose to embark on a reform with these objectives in mind and reject a financial solution based on a further deterioration of benefits, which would inevitably lead to the impoverishment of a growing proportion of pensioners.

Communicated by the Pensioners’ Department of the OGBL,
September 27, 2023