Country Panel Presentation: Luxembourg · 2016-05-26 · 2016 IGP Regional EMEA Seminar Windsor,...

© International Group Program

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.


Key Topics

Background Information

Country and Company Info &

Background

Social Security

Private Practice

Taxation Administration Legislation

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• 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



• 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


Key Topics


Social Security

Summary of Social Security

Benefits

Private Practice


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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%


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


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


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


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


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


Key Topics


Social Security

Private Practice

Customary Private Employee Benefits:

Type & Level of Benefits / Survey

Data / Plan Design / Benchmarking /

Trends


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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



• 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



• 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



• 95% of the financial institutions in Luxembourg

• Extension to other sectors : industries, services

• Small needs for Health & Assistance plans

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Trends


Key Topics


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


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%)

http://fr.fotolia.com/id/4363800


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


Key Topics


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


Social Security

Private Practice


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


Thank you for your attention! Key Topics We Discussed:


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


Contact Info

Laurence NICOLET

Head of Business Development – Employee Benefits

+ 352 26 214 58 882

[email protected]

Michael SIMARD

Head of Business Development – Employee Benefits

+ 352 26 214 55 91

[email protected]

Cardif Lux Vie Cardif Lux vie

www.cardifluxvie.lu www.cardifluxvie.lu

Country Panel Presentation: Luxembourg · 2016-05-26 · 2016 IGP Regional EMEA Seminar Windsor,...

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Transcript of Country Panel Presentation: Luxembourg · 2016-05-26 · 2016 IGP Regional EMEA Seminar Windsor,...