Higher Pension Contributions Will Cut Net Wages in Luxembourg from 2026

Starting January 2026, Luxembourg residents will see a reduction in their net salaries as part of the government’s pension reform announced by Prime Minister Luc Frieden earlier this month.
Pension contributions will rise by 0.5% of gross salary for employees, while the self-employed will face a 1% increase since they cover both employer and employee shares.

For minimum wage earners, the change means an additional €14 to €16 deduction each month, depending on skill level. For instance, an unskilled worker earning €2,703.74 gross will see monthly contributions increase from €216.29 to €229.81, while a qualified minimum wage worker on €3,244.48 gross will pay €275.78 instead of €259.55.

Higher earners will also feel the impact. Someone on €4,000 gross per month will contribute €340 instead of €320, a difference of €20 monthly, or €240 annually. At €10,000 gross, contributions will rise by €50 a month.

The government says this reform is necessary to keep Luxembourg’s pension system solvent, as forecasts predicted a deficit by 2026. However, it is only a temporary fix, with further reforms expected by 2030 to secure long-term stability.

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