On Tuesday 2 December 2025, the Luxembourg Chamber of Commerce and the Chamber of Trades issued a joint opinion on Draft Law No. 8634, which proposes amendments to the Social Security Code and the Labour Code to introduce a pension system reform.
The chambers noted that after thorough analysis and consultation with their members, they both oppose the draft law while reiterating the urgent need for a structural reform to guarantee the long-term sustainability of the pension system.
Although both chambers said they understand the sustainability concerns motivating the government’s initiative, they consider the proposed measures in social security and labour law insufficient, unsuitable, or counterproductive given the structural challenges the pension system faces.
The remarked that extending contribution periods by eight months by 2030 constituted too marginal an adjustment to influence the actual retirement age, currently one of the lowest in the OECD and said: “This measure will have only a modest financial impact and will therefore be insufficient to rebalance the system in the coming years”.
The professional chambers stated that raising the contribution rate to 25.5% immediately increases labour costs in a context of already fragile competitiveness, particularly for SMEs and sectors exposed to international competition. Furthermore, in the view of both professional chambers, this increase does not provide a structural solution to the pension system imbalance, whose projections clearly demonstrate medium-term non-sustainability. Finally, this measure sends an unfavourable signal to businesses and workers, suggesting that public imbalances are addressed primarily through higher contributions, to the detriment of the country’s attractiveness.
The increased flexibility regarding study years, although inspired by a desire to promote lifelong learning, also contradicts sustainability objectives, as it further raises the proportion of non-contributory periods. Both chambers therefore believe that if the State wishes to maintain these benefits, funding should come from the national budget rather than the pension insurance, which operates on an insurance-based logic.
The chambers also opposed introducing a progressive pension scheme into the Labour Code, as such a mechanism is inherently linked to social security (pension branch), and no added value is demonstrated compared with progressive early retirement and the combination of earnings with an early pension.
Moreover, this mechanism would impose a disproportionate administrative and financial burden on employers by transferring the management and payment of an allowance ultimately falling under social security. The practical arrangements envisaged also carry risks of errors, legal uncertainty, complexity for employees, and potential discrimination among them.
The chambers stated: “It is clear that the proposed measures only marginally delay the emergence of pension deficits. Only a comprehensive, coherent, and structural reform will ensure the financial viability of the pension system, restore intergenerational equity, and preserve the competitiveness of Luxembourg’s economic fabric.”
