Applying for an old-age pension as a non-resident (including cross-border workers)
Non-resident workers who have paid into a pension insurance scheme in Luxembourg enjoy the same entitlements as do resident workers. In social security matters, the legislation of the country where the person is employed applies.
An insured individual who wishes to receive their pension must apply directly to the relevant institution in their country of residence. That institution will then apply for the pension, on the insured's behalf, to the relevant bodies in the other countries in which they have worked.
If all of the conditions are satisfied, the insured has as many partial pension pots as the number of countries in which they have worked.
Who is concerned
Any worker or self-employed person who has worked and paid into a pension scheme in Luxembourg, but does not live there, is a non-resident.
In general, such people are likely to have worked both in Luxembourg and in one or more other EU Member States. In this context, the umbrella term 'non-resident' covers cross-border workers.
When the person retires, all periods during which they paid into a pension scheme in an EU Member State are added together to calculate the old-age pension to which they are entitled. Through Europe-wide agreements, these rules are extended to Iceland, Norway, Switzerland, Liechtenstein and the United Kingdom.
Pension from a given State will only be paid if the applicant satisfies the eligibility conditions set forth in that country's legislation. If the insured has paid into pension insurance schemes which mature at different ages, they will begin receiving the pension from the different pots when they reach the age stipulated in the legislation of the country in question.
In order to receive a Luxembourg pension, a non-resident must have worked in Luxembourg for at least one year. If they have worked in Luxembourg for less than a year, then their months of contributions in Luxembourg are taken into account by the country/countries paying towards the pension, but do not entitle the insured to payment from the Luxembourg pension fund.
The eligibility conditions depend on the type of pension being considered:
- early old-age pension from the age of 57 or 60;
- old-age pension from the age of 65.
Pension is not paid automatically. The insured must apply to receive their pension.
If an insured individual:
- has only ever worked in Luxembourg: they may apply between 2 and 6 months prior to their pension start date;
- has worked both in Luxembourg and in one or more foreign countries: it is best that they apply at least 6 months prior to the planned start date of their pension.
How to proceed
Filing the application in the country of residence
Non-residents must apply for pension in the country where they live, unless they have never worked in that country. A 'contact organisation' – typically an institution in the country where the non-resident lives – will handle the application.
If an insured last worked in Luxembourg, they are free to make their application either in Luxembourg or in their country of residence.
The contact organisation will facilitate the exchange of information between the different countries to which the application pertains. Once all of the countries in question have forwarded their decision to the contact organisation, the latter will send the insured a statement listing all of the decisions made.
The insured must provide the necessary supporting documents (certificates or diplomas, formal record of work abroad, etc.) along with their application.
Application processing time
The time taken to process a pension application will depend on the availability and the soundness of the required data. It may range from:
- a few weeks; to
- several months, if information needs to be obtained from abroad.
Payment of pension
Each EU Member State in which the person has paid pension insurance contributions for at least one year will pay their old-age pension when they reach the pension age set in that country's legislation.
If, for example, the insured has worked in 3 countries over the course of their career, they will receive 3 different old-age pensions. However, it is important to take account of the fact that the start dates for those pensions may vary depending on national regulations. In such cases, one speaks of a 'hybrid' insurance history.
A non-resident pensioner receiving a Luxembourg pension must declare that pension in their country of residence.
Calculation of pension
Each EU Member State is required to take account of the periods during which contributions were paid in other countries in order to determine pension entitlements and amounts.
This is the principle of aggregation of insurance periods, which guarantees that periods of contribution or work completed in one Member State will be taken into account when determining entitlement to benefits in another Member State.
Work periods in the public sector are also taken into account. On the other hand, certain rules are still domestic, such as the pensionable age.
When the applicant has a hybrid insurance history in at least 2 States, they will receive a partial pension from each State in which they have paid into a pension pot. The amount of each pension is proportional to:
- the number of insurance years completed; and
- the relative amount of contributions paid; and
- the pension calculation rules that apply in the country in question.
Specific case of periods of work outside the European Union: if the insured has worked in one or more countries with which Luxembourg has signed a social security agreement, then the pension is calculated on a case-by-case basis in accordance with each agreement. The same is true if the insured has worked in the EU and in one or more countries with which an agreement is in place.
Each State where the non-resident worker has paid into a pension insurance scheme performs the following calculations:
- domestic pension: the domestic pension is calculated based on national legislation, and takes into account only those periods worked in the country for longer than the minimum contribution period;
- theoretical amount: the competent institution calculates the theoretical amount of the old-age pension that would have been payable if the contributor had completed all insurance periods (including those completed abroad) under its legislation;
- proportional pension: on the basis of the theoretical amount, it determines the actual amount in proportion to the insurance periods actually completed under its legislation.
The appropriate pension fund then pays the higher of the 2 pensions (usually the proportional pension).