Taking retirement after purchasing insurance periods not worked
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Last updated more than 5 years ago
The aim of purchasing insurance periods retroactively is to enable workers who have interrupted or reduced their professional activity for family, or other reasons, to cover insurance periods that are incomplete so that an old-age pension can be drawn at the time of retirement.
Insured persons can therefore purchase, on a monthly basis, any pension contributions and increases that they have missed over their entire contributions history. The purchased periods can then be recognised as the qualifying periods required to draw an old age pension at the age of 65, or an early old-age pension at the age of 60.
Who is concerned
Whatever their pension scheme, any insured person residing in the European Union, who is under the age of 65 and whose contributions history is incomplete for the purpose of retirement, may apply to buy back insurance periods.
Determining the periods that can be covered
Applicants can make retroactive purchases for the following periods (if these occurred after they had reached the age of 18), during which they were obliged to interrupt or reduce their professional activity:
- years of marriage;
- years spent bringing up minors;
- caring for a recognised dependent or severely disabled person;
- time spent enrolled in a foreign pension scheme that is not recognised by a bilateral agreement, or time spent enrolled in an international organisation's pension scheme;
- time spent working for Luxembourgish diplomatic, economic or tourist missions abroad prior to 1 September 2000.
So, for example, a woman who stopped work after her marriage to look after her family may apply to retroactively purchase periods corresponding to the years of her marriage, or to years spent bringing up children.
For the application to make a retroactive purchase to be admissible, the interested party must:
- have accrued 12 months of mandatory insurance contributions;
- not have a personal pension;
- not be over the age of 65;
- live in the European Union when the application is submitted.
DeadlinesContributions must be paid within 3 months of the decision being given by the pension fund, failing which the right to make the purchase will be lost.
How to proceed
Application to make a retroactive purchase
Applications to make a retroactive purchase are to be sent by post to the National Pension Insurance Fund (Caisse nationale d'assurance pension - CNAP), using a specific form. The CNAP is responsible for examining the case and may ask the interested party to provide supporting documents.
The interested party may use the form to request a meeting with someone from the relevant government administration department to clarify certain points and set the terms of payment.
Submitting the application does not commit the interested party to making a payment: the application can be withdrawn at any time, in writing.
Interested parties must determine which months, falling within the periods that can be covered, are to be retroactively purchased and must set the contribution base (in other words, their income) to be recognised for the months in question.
The contribution base cannot be less than the minimum contribution base in force at the time, or more than:
- double this minimum for periods of marriage, time spent bringing up children or caring for dependent persons. In practical terms, the interested party must chose to base the calculations on: either the minimum contribution base, or double the minimum contribution base in force at the time;
- the maximum contribution base in force during the year in question, in the event enrolment with a foreign pension scheme. In this case, interested parties are free to set the income to be recognised in their contributions history, within the limit of the minimum and maximum contribution bases in force during the year in question. However, if the flat-rate redemption value or the actuarial equivalent is transferred by the foreign or international organisation directly to the CNAP, the amount is converted into pensionable income:
- if the amount transferred is not enough to fund the purchase in question, it must be topped up by the interested parties at their own expense;
- if the amount transferred exceeds the maximum purchase value, the surplus is paid to the interested party.
The amount of contributions to be paid for the retroactive purchase is set by the relevant pension fund. The contribution rate in force when the application is received is applied. The result obtained is then adjusted for compound interest of 4 % per year.
When an individual changes to an international organisation's pension scheme that provides for the redemption of pension rights accrued during periods of activity prior to their appointment, contributions paid on a national level may be transferred to the international organisation's pension scheme, at the insured's request, before the risk expires. In this case, contributions for the period in question correspond to the amount initially transferred, and the income to be recognised in the contributions history is the income actually earned.
Payment of contributions
On pain of forfeiture, contributions must be paid within 3 months of the pension fund's decision, which sets the contributions and serves as an invoice.
However, before this 3-month time frame expires, the insured may file a request to make yearly payments, over a period of no more than 5 years (no more than 5 annual instalments). These annual payments increase by 4 % a year and are payable within 10 days of the due dates set.
Years spent bringing up children and retroactive purchasing
For a parent with an incomplete contributions history, it may be wise to purchase insurance periods in order to be able to draw a personal pension, and then apply for years spent bringing up minors to be recognised, depending on the case, as equivalent or optional insurance periods for the purpose of retirement.
These years spent bringing up children must not be confused with the education allowance (Mammerent), which is intended for those who have, in theory, never carried out a professional activity, or with the baby years measure, intended for those who interrupted their professional activity for at least 2 years to devote themselves to bringing up their children.
In the event of dispute relating to the purchase of insurance periods, the decision taken by the management committee of the CNAP may be appealed before the Social Security Arbitration Tribunal (Conseil arbitral de la Sécurité sociale - CASS). An appeal may be lodged against the ruling of the CASS with the High Council of Social Security (Conseil Supérieur de la Sécurité Sociale).
All appeals must be made in writing within 40 days of the notice of the decision or the ruling. Beyond that time frame, no appeals are accepted, and the decision becomes final.
Forms / Online services
Demande d’achat rétroactif de périodes d’assurance
Antrag auf Nachkauf von Versicherungszeiten
Who to contact
National Pension Insurance Fund1A, boulevard Prince Henri
Postal address :
Phone : (+352) 22 41 41-1Fax : (+352) 22 41 41-6443from 8.15 to 16.00 / Contact form: http://www.cnap.lu/accueil-mail/