Frontier workers pay their pension contributions in the country of their place of work, (in this case in Luxembourg), and therefore benefit from the same rights as resident workers
At the time of retirement, all periods of contribution made in a member country of the European Union (EU) or the European free trade association (EFTA, i.e. Iceland, Norway, Liechtenstein and Switzerland) are taken into account and aggregated for the purposes of entitlement and calculation of the old-age pension. Each State is therefore obliged to take into account the periods of insurance which were completed in the other countries. It is the principle of aggregation of insurance periods that ensures that periods of insurance or work completed in one State will be taken into account for entitlement to benefits in another State (the rules on aggregation of insurance periods are also applicable under bilateral conventions).
if a frontier worker has contributed for less than a year in the Grand Duchy of Luxembourg and the rest of his career in the country of residence, the pension fund of that country will pay his full pension;
if a frontier worker has spent part of his professional career in Luxembourg and the other part in the country of residence or in another EU or EFTA country, this is known as a “mixed” career; such workers receive a pension from each State, provided that they have been insured in the country for at least one year;
if a frontier worker has spent his entire working life in the Grand Duchy, his entire pension is paid by the Luxembourg fund, even if he does not live in the country.
The age of entitlement to an old-age pension is governed by national regulations. This legal age varies from one country to another. The pension of a country is therefore only paid if the claimant fulfils the conditions for entitlement laid down by the legislation of that country. In the event of a mixed career with old-age insurance schemes having different legal ages, insured persons are awarded a partial pension by each country, the amount and legal age of which are determined in accordance with the provisions applicable in the State concerned.
Example:
Let’s assume a frontier worker living in Belgium who has worked for 40 years, 30 of which in Luxembourg. In 2024, he can apply for a pension from the age of 57, the minimum age for early old-age pension in Luxembourg. In this case, he will only receive the Luxembourg part of his pension until he reaches pensionable age in Belgium (65 years in 2024).
To be entitled to a Luxembourg old-age pension, the insured person must have at least one year of insurance contributions in Luxembourg and at least 10 years of insurance in another country of the European Union (EU) or the European free trade association (EFTA, i.e. Iceland, Norway, Liechtenstein and Switzerland). If the period is less than one year, the months contributed in Luxembourg will be taken into account by the other country and will not give the right to the payment of a Luxembourg pension.
In principle, social security benefits are granted only after formal submission of an application by the persons concerned. Frontier residents must submit their application to the competent entity in their place of residence, in accordance with the legal requirements of that country. This entity will, if necessary, transfer the liaison forms to the competent entities in the other countries concerned (the insured person must, however, state that he has also paid contributions in another country). However, where insured persons have never worked in their country of residence, the application for the old-age or disability pension must be submitted in the country where they last worked.
Example:
Mr. Doe lived in country A and worked in neighbouring country B as a frontier worker. He paid pension contributions in country B. There are several possible scenarios:
if he is resident in country A at the time he wishes to claim his old-age pension, he should apply to the competent institution in country A (if he has never worked in country A, the application should be made to the administration in country B);
if he resides in country B, he should contact the administration in country B where he paid his pension contributions;
if he lives in another country (i.e. neither A nor B), he should submit his claim to the pension administration in country B where he was last employed. The latter will forward the claim to the other administrations concerned.
In order to avoid unnecessary delays, it is important to submit the application for an old-age pension to the competent administration well before the date of entitlement.
By way of exception to the principle described above, at the time of retirement, a Belgian, German or French resident who receives sickness benefits from the Luxembourg fund may submit his application for retirement to the competent Luxembourg pension fund. If the frontier worker is also affiliated in his country of residence, the Luxembourg pension fund will then contact the competent pension administration in the country of residence with a view to examining the pension rights in that country.
In the case of a career in only one country, the amount of the pension shall be determined in accordance with the provisions applicable in that State.
In the case of a so-called mixed career, claimants receive a pension from each state in which they paid contributions for more than one year. The amount of each pension to which frontier workers are entitled is proportional to the number of years of contributions completed in the country concerned.
Each State where a frontier worker has been insured shall make the following calculation:
national pension: calculated on the basis of national legislation, taking into account only periods worked in the country for more than the minimum contribution period;
theoretical amount: the competent administration calculates the theoretical amount of the old-age benefit which would have been due if the insured person had completed all periods of insurance, including those abroad, under its legislation (for periods of insurance abroad, the annual average of wages, salaries or contributory income received in Luxembourg is used as a reference by the Luxembourg fund);
proportional pension: on the basis of the theoretical amount, it sets the actual amount in proportion to the length of the insurance periods actually completed under its legislation.
The competent pension fund then pays the higher of the two pensions, usually the proportional pension. The national pension can only be calculated in the case of an autonomous entitlement, i.e. if a pension entitlement can be established solely on the basis of national periods.
Example:
The insurance period of an insured person is as follows:
France (FR): 3 years
Belgium (BE): 32 years
Luxembourg (LU): 5 years
Total: 40 years
The proportion allowing the transition from the theoretical amount to the amount actually payable by Luxembourg is therefore equivalent to the following fraction:
LU periods / (LU periods + FR periods + BE periods) = 5/40 = 0.125
As a result, all pension elements determined by aggregating up all periods (theoretical amount) will be multiplied by the pro rata factor calculated in this way.
Pensions paid by Luxemburgish authorities are subject to personal income tax in Luxembourg. A scale of tax deductions on pensions is published annually by ministerial order. This scale can be consulted on the website of the Direct tax administration where it is also possible to calculate the income tax and the various withholding taxes on wages and pensions.
Contribution to long-term care insurance
All pensions, including the pensions of frontier workers, are subject to the long-term care insurance contribution. This contribution amounts to 1.4% of the pension, after the deduction of 1/4 of the social minimum wage.
(see Social parameters)
Health insurance contributions
For old-age pensioners affiliated to the National health fund (CNS), the contributions are shared equally between the insured persons and the National pension insurance fund (CNAP). The contribution is only intended to finance benefits in kind, as a cash sickness benefit is no longer granted. The contribution payable by pensioners affiliated to the CNS amounts to 2.8% of the gross pension.
It should be noted that a distinction must be made between three cases when determining whether a non-resident pensioner is liable to pay health insurance contributions:
If the non-resident pensioner only receives a Luxembourgish pension, he remains affiliated to the CNS and must therefore pay health insurance contributions in Luxembourg.
If the non-resident pensioner receives a pension from Luxembourg and a pension from their country of residence, they will be insured with the competent health insurance fund in their country of residence. Consequently, he does not have to pay health insurance contributions in Luxembourg, but he must pay the social security contributions due in his country of residence (if applicable, including on his Luxembourg pension,).
If the non-resident pensioner receives a pension from Luxembourg and one or more pensions from other EU or EFTA countries, but does not receive a pension from his country of residence, he is insured in the country in which he has been subject to health insurance legislation for the longest period of time. If, in application of this principle, the non-resident pensioner is insured in Luxembourg, he must pay health insurance contributions in Luxembourg (if applicable, also for his pensions from other EU or EFTA countries).
Under what conditions can a non-resident pensioner claim sickness benefits in kind in Luxembourg?
In the event of illness, non-resident beneficiaries of an old-age or invalidity pension who last worked in Luxembourg, as well as their co-affiliated family members, may continue to receive benefits in kind in Luxembourg for the continuation of a treatment already begun before the old-age or invalidity pension was granted.
Irrespective of the treatment continuation condition, individuals receiving an old-age or invalidity pension who have worked as frontier workers in Luxembourg for at least two years during the five years prior to the pension start, may, just as are their co-affiliated family members, receive in kind medical benefits in Luxembourg provided that they are resident in Germany, Belgium, France, Austria, Spain or Portugal.