Why do pensioners continue to work in Luxembourg? Reasons and facts

“I enjoy the work,” says Georges Reckinger, hunched over a circular saw. Deftly, he pushes a slab of wood forward, at ease with the tool in front of him.

After 48 years working in carpentry, Reckinger could long be retired, but he has chosen to keep working. “I can earn a little extra money,” he says. Reckinger is self-employed and also remembers days when things weren’t going so well and his pension contributions were modest.

The 62-year-old’s work has adapted to his age, but there is still plenty he can do. Collecting stamps or devoting his time to another hobby is not an option for him, he says.

“My experience is that you should start thinking about retirement age from the age of 50, and for me my job is also a nice hobby. A job well done is simply fun,” he says.

Craftsman Georges Reckinger: “A job well done is simply fun.” © Photo credit: Chris Karaba

“My experience is that you should start thinking about retirement age from the age of 50, and for me my job is also a nice hobby. A job well done is simply fun,” he says.

Workers in Luxembourg can retire with a full pension after 40 years of work, with that amount set to increase over the coming years as part of a pension reform adopted at the end of 2025. An employee contract automatically expires at age 65.

Reckinger doesn’t understand why you shouldn’t be allowed to work at retirement age if you are still physically and mentally able to do so. “As long as you can work and enjoy it, you should do it,” he says.

He knows many people who are over 70 and, like him, were self-employed and who are now working in their old business “with the younger generation”.

Skills shortage or insufficient pension

“Luxembourg needs more senior citizens in the workplace: this is a strategic challenge that is crucial for maintaining both economic development and the social model,” says the employers’ association UEL.

The CSL Chamber of Employees, on the other hand, takes a critical view. Figures from the General Inspectorate of Social Security (IGSS) show that many people do not retire immediately after meeting the eligibility requirements, but extended their working life.

“This data shows that people with employment histories in several countries in particular tend to extend their working lives in this way,” the CSL explains. “This can certainly be interpreted as an indication that, in these cases, the Luxembourg pension alone is not sufficient and it is necessary for insured persons to wait to receive a pension from another country at a later date.”

Despite being entitled to a pension or perhaps even having already retired, returning to work happens for various reasons, says Gilles Walers, a member of the Chambre des Métiers, Luxembourg’s Chamber of Skilled Trades and Crafts. “Many companies want to retain the expertise that older employees have for as long as possible,” Walers says.

It is “relatively common for people to work beyond the statutory retirement age” in the skilled trades, especially at company management level, he says. If someone has founded a company or taken it over themselves, they want to make sure that the company handover is successful.

Passing on knowledge and experience

If a bricklayer or roofer continues to work, they will certainly no longer work on the construction site, but rather in operational training, work organisation and construction site planning, Walers explains.

“What we also often see is that tradespeople of retirement age become active in training and further education, i.e. they continue to work in order to pass on their knowledge in vocational training. Knowledge that would otherwise be lost. There are also a number of tradespeople who offer to mentor young entrepreneurs or people starting out in their careers,” Walers says.

Then there is the shortage of skilled labour, which is pronounced in various professions where few young people are currently in training, which also means that experienced tradespeople are staying in the profession longer. In the coming years, the shortage of skilled labour in companies will become even more noticeable: “And then simply ‘reactivating’ retirees will also be difficult because many Italian or Portuguese employees will also return to their home country when they retire,” Walers says.

Tax aspects

After reaching the regular retirement age (65), you can continue to work freely without your pension being reduced.

Early retirees are allowed to work, but if their income is above a third of the social minimum wage, their pension will be reduced. If income is above the average of the five best contribution years, the pension can be withdrawn or suspended.

If annual income from self-employment exceeds one-third of the social minimum wage, the early retirement pension was completely withdrawn until recently.

In 2024, the Constitutional Court declared this stricter treatment of the self-employed compared to employees to be unconstitutional. The pension insurance institution CNAP has not applied this old rule since then. The unequal treatment has been stopped by the courts, but has not yet been rectified by law. A new legal framework is still pending.

“In the skilled trades, we rarely hear people citing financial reasons for continuing to work. This is largely due to the fact that traditional tradespeople have worked full time, and those who have worked for more than 40 years also have corresponding pension entitlements,” Walers says.

One exception to this is the cleaning sector, where a lot of work is part-time.

When people work in older age because they cannot make ends meet, cross-border workers or immigrants will often do so in their home country, rather than in Luxembourg.

Take Ildiko S., for example, a former industrial production worker. She earned significantly more in Luxembourg (with night shifts) than in her home country or in the border region, but on the other hand, “they were all temporary contracts, so I was always unemployed for two, three or even four months at the end of the year”.

Now, at retirement age, she works by the hour as a cleaner, but not in Luxembourg. It’s not worth travelling to Luxembourg for this work. As a result, you rarely see older people working at supermarket or petrol station checkouts, in shops or as cleaners, sectors dominated by foreign workers.

According to Eurostat data (for 2023), one in ten pensioners in Luxembourg continues to work after receiving their first pension payment, around a quarter of them for financial reasons. According to Statec data, residents of the Grand Duchy are also working longer today than in the past.

“The employment rate of 55- to 64-year-olds has risen by 57% since 2004, as has the length of working life, which has risen from 30 to 35 years,” Statec notes. Still, fewer than one in two people aged 55 to 64 in Luxembourg are in employment, compared to an average of almost 70% in OECD countries.