On 21 August 2018, the law of 1 August 2018 reforming the supplementary pension system (the ‘Law’) was published in Mémorial A of the Luxembourg Official Journal. The Law will come into force on 1 January 2019, with the exception of the provisions of article 8 on the acquisition of rights, which came into force on 21 August 2018.

The changes introduced by the Law relate in particular to the following points.

Scope of the Law extended to the self-employed and liberal professionals

Specific supplementary pension systems, subject to the prior agreement of the ‘Inspection Générale de la Sécurité Sociale’, will be put in place to take pension contributions paid by self-employed workers.

Deadline for the acquisition of supplementary pension rights (article 8)

The maximum period before which an individual can acquire rights to a supplementary pension cannot exceed three years, compared with ten years before the Law. More specifically, according to the Law:

• For members (‘affiliés’) who started work after 20 May 2018, the total cumulative period for the acquisition period plus any possible waiting time, if applicable, cannot exceed three years.
• For members who started work before 21 May 2018, the total cumulative period for the acquisition period plus any possible waiting time, if applicable, cannot exceed ten years nor can it extend beyond 20 May 2021.

What happens to vested pension rights if a member leaves an organisation before reaching retirement age?

If vested rights are transferred

The Law stipulates that vested rights can now be transferred to another scheme within the same company. Conversely, the transfer of vested rights to a life insurance company is no longer allowed by the Law. It is still possible to transfer to another supplementary pension system put in place by another company or another group of companies, as well as to an accredited supplementary pension system, as stipulated by the new law.

If the vested rights are maintained

The Law now specifies the rules to determine the value of vested rights when the member choses to maintain them in the system used by their previous employer until they retire. The Law also stipulates that when they leave the company, the member must be able to opt for a refund of the reserves acquired in the event of death before reaching retirement age, whilst also accepting a potential recalculation of the value of acquired benefits.

If the vested rights are bought back

The Law restricts the situations in which a member can ask for their vested rights to be bought back to the following two cases only:

• when the reserves accumulated by the member do not exceed three times the minimum social wage for unqualified workers (EUR 6,145.62); or
• if the worker is carrying out a new activity for which he or she is no longer subject to Luxembourg sickness insurance (in this case, the condition relating to accumulated reserves does not apply).

Information for members

The employer’s obligation to provide information has been extended and consolidated. In particular, the Law specifies and adds to the list of details that must be provided in writing at least once a year to members. The Law also specifies that from now on, the company must inform any member who asks about the consequences of stopping work on their rights to a supplementary pension, in writing. The Law also requires the employer to inform an outgoing member of the choices available to them regarding the destination and the conditions of treatment of any reserves acquired if the vested rights are maintained. This information must be provided within 30 days of the member’s departure.

Company transfer

The Law clarifies how rights that have been acquired or are in the process of being acquired are dealt with in the event of a company transfer, and in particular specifies that such a transfer cannot result in any lessening of these rights.