The government’s proposed pension reforms will mean lower take home salaries for those who are currently working, the social security ministry confirmed to The Luxembourg Times on Friday. 

“As the contribution rate for the pension scheme rises […] 0.5%, the semi-net [salary after social security contributions] will be lower,” a ministry spokesperson said. 

The government’s proposal unveiled on Wednesday states that it intends to increase social security contributions from the current 24% to 25.5%. However, it had not explicitly stated how the increase will be split between employees, employers and the government. 

“For employees, this contribution is currently divided into three equal parts: 8% is paid by the employee, 8% by the employer and 8% by the state. As the government has now proposed to increase [contributions] from 24% to 25.5%, the three equal parts become 8.5%,” the social security ministry spokesperson said. 

Also read:Pensions talks leave unions and employers frustrated

For self-employed workers, the contribution will rise from 16% to 17%, while the state will cover the remaining 8.5%. This means the self-employed will shoulder double the increase of salaried employees. 

The government said it plans to review the status of self-employed workers – statut de l’indépendant – in the coming months to address social security contributions for this group.

The ministry estimates the change will cost the state about €187 million per year on average between 2026 and 2029. It did not provide a breakdown of how much additional burden is expected to cost employees, employers or the self-employed.

Separately, the employers’ lobby group, Union des Entreprises Luxembourgeoises (UEL), estimates that employers face an additional bill of at least €140 million starting from 2026. 

How will the change impact your pay packet?

The government did not provide data on how the proposed increase in contributions will affect different workers based on income, but the Luxembourg Times has calculated reductions of between €180 and €780 per year for salaried workers, rising to €360 to €1,560 for self-employed, based on the current and new rates of contributions.