Public petition n°4203

Petitioner: Morgana Rose Bourggraff

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This petition calls upon the Government and the Chamber of Deputies: to raise the tax-deductible ceiling applicable to employees' personal contributions to supplementary occupational pension schemes from EUR1,200 to at least EUR4,500 per year; and to provide for the periodic adjustment of this ceiling so that its real value is not progressively eroded by inflation. This increase would align the second-pillar ceiling with the EUR4,500 ceiling now applicable to individual third-pillar retirement savings plans.

The tax-deductible ceiling applicable to employees' personal contributions to supplementary occupational pension schemes is currently limited to EUR1,200 per year, or just EUR100 per month. The ceiling dates, in principle and in order of magnitude, from the beginning of the 2000s and has not been adjusted to reflect increases in the cost of living. As a result of cumulative inflation since that period, its real value has fallen considerably. A simple adjustment intended to preserve its original purchasing power would have brought the ceiling to approximately EUR1,900 today. Maintaining the nominal amount at EUR1,200 therefore amounts, in practice, to progressively reducing the tax incentive available to employees who wish to build a supplementary pension. This situation appears inconsistent with Luxembourg's stated objectives of diversifying retirement income and encouraging long-term savings. It is particularly difficult to justify now that the tax-deductible ceiling applicable to individual third-pillar retirement savings plans has been raised to EUR4,500 per year. The Luxembourg ceiling also appears particularly limited when compared with the mechanisms available in several other European countries. In Germany, contributions to certain occupational pension arrangements may be exempt from income tax up to 8% of the annual contribution ceiling for statutory pension insurance, corresponding to EUR8,112 in 2026. In Ireland, personal contributions to occupational or individual pension schemes qualify for tax relief within a limit ranging from 15% to 40% of income, depending on the taxpayer's age and subject to an earnings ceiling of EUR115,000. For a person aged between 30 and 39, the applicable limit may therefore reach EUR23,000 per year. In France, the deductible ceiling applicable to retirement savings is also calculated by reference to professional income and is substantially higher than the Luxembourg ceiling. National pension and taxation systems are not identical, and this petition does not call for Luxembourg to reproduce any particular foreign model. These comparisons nevertheless demonstrate that an annual ceiling of EUR4,500 would constitute a moderate measure when considered alongside the incentives available for retirement saving in several other European countries. Supplementary occupational pension schemes nevertheless provide a simple and regulated means for employees to prepare for retirement, particularly where the employer also contributes to the scheme. They facilitate regular savings directly linked to employment and can usefully complement the statutory pension system. The current ceiling prevents employees who wish to do so from significantly increasing their retirement savings through their occupational scheme. It also creates a difference in treatment between retirement savings accumulated through an occupational scheme and those accumulated individually that is difficult to understand or justify. Raising the ceiling to at least EUR4,500 per year would: - restore and increase the real value of the tax incentive available to employees; - make the second pillar genuinely useful for retirement planning; - ensure greater consistency between the different tax-incentivised retirement savings arrangements; - bring Luxembourg closer to the occupational retirement savings mechanisms available in other European countries; - encourage regular, long-term saving; - strengthen individual responsibility without calling into question the central role of the statutory pension system; and - support the future resilience of Luxembourg's pension system. To prevent the same situation from recurring, the ceiling should subsequently be reviewed and adjusted periodically-for example, in line with changes in the cost of living or whenever the principal tax thresholds are reformed.