A snake biting its own tail. That’s the picture you get when you look at the situation of senior citizens in Luxembourg. On the one hand, the country has the lowest effective retirement age in the OECD, at 59.5, while the legal retirement age is 65. On the other hand, the employment rate for the 55–64 age group is 49%, well below the European average of 65%. And this at a time when Luxembourg is also facing a sustained decline in fertility.

The activity rate for 55–64 year olds has nevertheless risen by 57% since 2004, and the working life has increased from 30 to 35 years. However, many people leave the labour market before the legal age, and only one in two residents aged 55–64 was still in work in 2023. In more detail, 76.9% of 55–59 year-olds were in work, a figure that falls to 22.9% for 60–64 year-olds, and only 4.4% of those aged 65 or over were in work in 2023. “Half of these 4.4% explain that they work for pleasure and the other half for financial need,” explained Statec a few weeks ago, when presenting its 2025 "Work and Social Cohesion" report.

Aid to encourage the recruitment of older workers

With its forthcoming pension reform, the government would therefore like working people to work longer. But if seniors end up unemployed, what’s the point of "preventing" them from retiring early? "There are solutions that we recommend,” replied the chairwoman of the House of Training and chair of the Talent Taskforce, Karin Scholtes, on Tuesday 2 December. "We have to stop equating seniority with old age, even though we are living longer and longer. It’s a fundamental change of perspective. I often say that seniors actually represent the new next gen of talent: a pool of candidates that we just need to get to know better,” also insisted the co-president of the Luxembourg Federation of Recruitment, Search and Selection (FR2S), Gwladys Costant, last September.

Among the 34 recommendations made by the Chamber of Commerce, there is in particular the fact of investing "massively in the training of these seniors to maintain their employability. We also need to promote state aid for hiring older workers and encourage intergenerational complementarity. The government has introduced measures to reduce social security contributions for this population. For example, from the age of 45, certain employer contributions are no longer due, and from the age of 50, companies are exempt from these contributions. The major problem is that unfortunately many companies, particularly SMEs, are not sufficiently aware of this aid, unlike large companies, even though it can remove this barrier to the (re)recruitment of older workers,” explains the Chamber of Commerce’s training director, Muriel Morbé.

A smoother transition

Statistics show in fact that training decreases with age, whereas with digitalisation, the opposite should happen. In 2020, 5.6% of 55–64 year-olds in the European Union took part in training in the four weeks preceding the survey, compared with 9.2% of all adults. In Luxembourg, this rate is 8%, compared with 21.5% in Sweden, for example, or 19.3% in Finland.

Another specific feature of Luxembourg, due to the proportion of cross-border commuters and foreigners among the country’s working population, according to the 2024 annual report of the Caisse nationale d’assurance pension (CNAP), 51.6% of pensions, or 118,650, were paid to non-resident beneficiaries, representing around €2.25 billion, or 33% of the total €6.8 billion paid out. This compares with just €385 million in 2005. "These financial flows largely escape the national economic circuit, an observation that highlights the economic stakes involved in the mobility of retirees and the need to rethink the end of careers to maximise local spin-offs," explains the Chamber of Commerce.

Among the avenues put forward by the government to reform the pensions system is the introduction of a new phased retirement scheme to enable people at the end of their careers to reduce their working hours while receiving part of their pension. "As well as contributing to the sustainability of the system, this smooth transition between working life and retirement could pave the way for a new way of looking at the end of a career, as a period of enhancing skills and preparing for an active retirement through charity work or another project of general interest. [...] Encouraging the development of a life project in Luxembourg after retirement also means strengthening retirees’ roots in the country and maximising the impact of pensions on the national economy, by further limiting the flight of financial flows abroad," the document adds.