Post on 17-Jul-2020
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Country Panel Presentation: Luxembourg
2016 IGP Regional EMEA Seminar Windsor, May 24-26, 2016
Laurence NICOLET – Head of Business Development Employee Benefits Luxembourg market Michael SIMARD – Head of Business Development Employee Benefits International market
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This presentation was exclusively prepared for the attendees of the 2016 IGP Regional EMEA Seminar. None of the contents of this presentation may be copied or disclosed to any other party or used for any other purpose than the one mentioned above without IGP's prior written permission.
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Key Topics
Background Information
Country and Company Info &
Background
Social Security
Private Practice
Taxation Administration Legislation
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Background Information
• Luxembourg is located in the center of Europe and has 3 main administrative districts (Luxembourg, Diekirch and Grevenmacher)
• Since 1994, Luxembourg city is listed in the UNESCO World Heritage for its old Quarters and Fortifications
• Luxembourg city is one of the main important financial center in Europe (Banking, insurance, funds industry)
• Luxembourg population in 2016 18 live birth average per day 12 death average per day 29 immigrants average per day (people who move to
Luxembourg but are not native) The population in Luxembourg will be increased by 35
persons daily in 2016
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Country Info
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Background Information
• Age Structure
The total dependency ratio of population in Luxembourg is 49.5% The total life expectancy at birth in Luxembourg: 79.6 years.
• Population and employment Rate of foreign nationals in the active population: 71% (45% cross border
employees and 26% resident foreigners). Half of the cross-border employees come from France.
• Inflation rate: 0.1%
• Unemployment rate: 6.9%
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Country Info
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Key Topics
Background Information
Social Security
Summary of Social Security
Benefits
Private Practice
Taxation Administration Legislation
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Summary of Social Security Benefits
• Affliation is mandatory
• Social contributions:
• Maximum base to use: 5 times the minimum annual salary (EUR 115 377.84 on 1 July 2015)
• At least 12 contribution months (within a reference period of 36 months), with at least 120 contribution months across all EU and states with reciprocal agreements with Luxembourg.
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Retirement Pension
Pension Sickness Work accident Dependancy
Employer 8.00% 3.05% 1.21% 0.00%
Employee 8.00% 3.05% 0.00% 1.40%
State 8.00%
24.00% 6.10% 1.15% 1.40%
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Summary of Social Security Benefits
• Normal retirement age : 65
• Early retirement: From the age of 60 years and 480 contribution months (and assimilated) From the age of 57 years and 480 mandatory contribution months
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Retirement Pension
23.725% Minimum social salary * career 40
= 5 469 € * year of Luxembourg career 40
Sum of the Luxembourg professional revenues on which a
contribution is taken * 1.838%
Basic Amount
Earnings-related supplement
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Social Security Benefits Disability Benefits
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Salary paid by the Employer
A sickness benefit equal to the gross salary
A disability pension is paid by the State (basic
amount + earnings- related supplement)
The first 3 months 9 months - To age 65 (replaced by the old age pension
- In case of death - Until the resemption at
work
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Social Security Benefits Life benefits
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Criteria Spouse’s pension Orphan’s pension
Qualifying period 12 months of paid contributions during the 3 years prior to death
12 months of paid contributions during the 3 years prior to death
Conditions Death occured after 12 months of mariage
Legitimate, adopted, illegitimate, acknowledged or dependent child
Duration Until - the spouse’s death - the remariage
Until - Age 18 or mariage before age 18 - Age 27 if a full-time student - No age restrictions if mentally or
physically unable to work
Amount 100 % of the basic amount + 75% of the earnings-related supplement
32% of the basic amount + 25% of the earnings-related supplement
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Social Security Benefits
• Contributions Employer: 3.05% Employee: 3.05%
• Sickness benefits cfr Disability
• Medical care Active and retired employees and their dependents are covered under a
comprehensive state-run program that covers impatient hospital expenses in full and outpatient costs at 80%, 100% or 40% depending on the medicine application
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Sickness and medical benefits
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Social Security Benefits
• Funeral indemnity: EUR 959.18
• Unemployement : 80% of gross earnings of base salary during the last 3 months
• Family allowances:
• Maternity benefits: EUR 194.02 (index 775.17) / week during 16 weeks
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Other Benefits
1st child EUR 185.60 (index 775.17) / month
For 2 children EUR 440.72 (index 775.17) / month
For 3 children EUR 802.74 (index 775.17) / month
For 4 children EUR 1 164.56 (index 775.17) / month
For 5 children EUR 1 526.38 (index 775.17) / month
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Key Topics
Background Information
Social Security
Private Practice
Customary Private Employee Benefits:
Type & Level of Benefits / Survey
Data / Plan Design / Benchmarking /
Trends
Taxation Administration Legislation
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Customary Private Employee Benefits
• Group life benefits Life lump sum Spouse’s pension Orphan’s pension Accidental life lump sum
• Group disability benefits Disability pension Waiver of premiums Total and Permanent Disability lump sum (TPD)
• Retirement benefits DB and DC Employer’s and employee’s contributions
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Type of Benefits
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Customary Private Employee Benefits
• GENERAL Normal retirement age : 65 years Reference salary : total gross anual salary ( 12 or 13 times the gross
monthly salary)
• RETIREMENT – mainly DC plans Affiliation period : 6 months Acquisition period : 2 years
For the staff members: 3% S1 + 8% S2 For the Middle Managers: 5% S1 + 15% S2 For the Top Management: 8% S1 + 20% S2
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Benchmarking
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Customary Private Employee Benefits
• LIFE (all causes) Life lump sum depending on the marital status Single member: 100% of the annual salary Married or cohabiting partners: 200 % of the annual salary + 50% of the annual salary per dependent child
• DISABILITY – earning incapacity level A disability pension equals to [10% - 20% ]S1 + [ 50% - 70% ] S2 Waiver of premiums A 3 months waiting period No indexation
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Benchmarking
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Customary Private Employee Benefits
• 95% of the financial institutions in Luxembourg
• Extension to other sectors : industries, services
• Small needs for Health & Assistance plans
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Trends
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Key Topics
Background Information
Social Security
Private Practice
Taxation
Taxation of benefits (e.g. lump
sum versus pensions) /
Tax treatment of ER and EE
contributions
Administration Legislation
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Taxation
• Flat rate amount 20% on Employer’s premiums and contributions
• Remuneration tax 0.9% on Employer’s premiums and contributions
• Deductible charges (operational costs)
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Applicable taxes – from Employer’s side
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Taxation
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Applicable taxes – from Employee’s side
Country of residence
Lump sum resulting from the Employer’s contributions
Tax free Tax free Taxation of the capital gain (progressive tax scale applicable)
Tax free
Lump sum resulting from the Employee’s contributions
Tax free
Tax rate of 10% (+ additionnal municipality)
Tax rate of 6.5% on the lump sum + social security charges
Depends on the contract’s duration - 50% of the capital gains taxed at
the progressive tax scale (max 45%)
- 100% of the capital gains taxed at a rate of 25%
+ solidarity contribution(5.5%) + church tax(8-9%)
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Taxation
• Possible amount of the personal contribution: EUR 0, 25, 50, 75 or 100 per month
Amount fixed for a full calendar year
Personal contributions are deducted monthly from the employee’s salary
Tax deduction up to EUR 1 200/year (L.I.R article 110, § 3)
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Employee’s contributions
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Key Topics
Background Information
Social Security
Private Practice
Taxation Administration
Legal requirements re. administration of
benefit plans: actuarial valuations / communications / involvement of
unions/employees
Legislation
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Administration of Plans
• In accordance with the law dated as of 8 June 1999 (registration with the Supervising authority : IGSS)
• Only for the staff members (employment contract)
• No discriminatory criterias to create categories of staff
Basic rules to respect
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Key Topics
Background Information
Social Security
Private Practice
Taxation Administration Legislation
Current legislative issues with
significant impact on the funding of the benefit plans / How are employer
and employees affected?
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Legislation
• Improvements are expected for the self employed individuals
• Increase of the authorized annual amount for the employee’s contributions
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Update
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Thank you for your attention! Key Topics We Discussed:
Background Information
Country and Company Info &
Background
Social Security
Summary of Social Security
Benefits
Private Practice
Customary Private Employee Benefits:
Type & Level of Benefits / Survey
Data / Plan Design / Benchmarking /
Trends
Taxation
Taxation of benefits (e.g. lump
sum versus pensions) /
Tax treatment of ER and EE
contributions
Administration
Legal requirements re. administration of
benefit plans: actuarial valuations / communications / involvement of
unions/employees
Legislation
Current legislative issues with
significant impact on the funding of the benefit plans / How are employer
and employees affected?
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Please remember to complete this panel’s
survey
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Contact Info
Laurence NICOLET
Head of Business Development – Employee Benefits
+ 352 26 214 58 882
Laurence.nicolet@cardifluxvie.lu
Michael SIMARD
Head of Business Development – Employee Benefits
+ 352 26 214 55 91
Michael.simard@cardifluxvie.lu
Cardif Lux Vie Cardif Lux vie
www.cardifluxvie.lu www.cardifluxvie.lu