Gradual pension

The gradual pension provided for in the Labour Code is aimed at employees who wish to reduce their working hours while continuing to receive additional income until they reach the final retirement age.

Information for employees

What is the gradual pension?

The gradual pension is a benefit to which an employee is entitled if they reduce their working hours, provided that they meet the conditions for receiving an early retirement pension and obtain their employer's consent.

Conditions

To apply for this benefit, the applicant (whether or not they are resident in Luxembourg) must meet the following criteria:

  • Length of service and working hours: The applicant must have held a position with at least 75% of a full-time position with the same employer in Luxembourg for the three years prior to applying for a reduction in working hours for the gradual retirement pension.
  • Pension entitlement: The applicant must meet the conditions for an early retirement pension with the CNAP.
  • Terms of the reduction:
    • The reduction in working hours must be at least 25% of the last working hours.
    • The remaining working hours must not be less than 16 hours per week.
  • Calculation terms: The amount of compensation for the gradual reduction in working hours corresponds to the amount of the early retirement pension multiplied by the percentage of the reduction in working hours.

Application procedure (in two steps)

Step 1: Obtaining the certificate of entitlement to early retirement.

The employee applies to the CNAP for a special certificate. This document officially confirms:

  1. the date from which entitlement to early retirement pension exists
  2. fulfillment of the condition that 75% of the working hours of a full-time position have been worked in the last three years. It should be noted that this must be a single job with the same employer.

Details of the application procedure:

  • Applying for a certificate for the granting of a phased retirement pension:
    • A special online procedure will soon be available on MyGuichet, through which insured persons can apply for the certificate for the granting of a phased retirement pension.
    • Please note: This certificate is only valid for phased retirement. It should not be confused with the traditional ‘pension certificate’, the ‘certificate of entitlement to early retirement’ in the context of early retirement or a social plan, or the ‘certificate for the application for a reduction for remaining in employment (AMVP)’.
    • Deadlines: The administration's response deadlines are the same as those for an application for early retirement.
    • The certificate is accompanied by an application form for the granting of a progressive pension and an estimate of the pension amount. In this case, the employee does not need to submit a separate application for an estimate.
Step 2: Employer's consent and application for compensation
  • With the certificate of eligibility for gradual retirement, the employee applies to their employer for a reduction in working hours.
  • If consent is given, both parties sign an addendum to the employment contract.

The employee then submits their application form for the granting of compensation for gradual retirement to the CNAP, together with the addendum and the other supporting documents specified in the form. This form must be received by the CNAP no later than two months before the start date of the addendum.

Information for employers

Below are the key points and obligations of the employer when implementing a phased retirement scheme for an employee.

Role of the employer

The granting of phased retirement benefits requires the consent of the employer. The employer is free to accept or refuse the employee's request for a reduction in working hours.

Prerequisites for the employee

Before agreeing, check that the employee meets the legal criteria:

  • Seniority: The employee must have held a position (at least 75% of full-time hours) in your company for at least 3 years.
  • CNAP certificate: The employee must provide you with an official certificate from the CNAP attesting to their entitlement to a phased retirement pension.

Contractual obligations

If you give your consent:

  • An amendment to the employment contract must be signed to formalize the new working hours.
  • Working time limits:
    • The reduction in working hours must be at least 25% of the working hours specified in the initial employment contract.
    • The remaining working hours may not be less than 16 hours per week.

Administrative procedure

The employee must return the progressive pension allowance application form to the CNAP, which will be sent to them together with the certificate for the progressive pension.

This form must be accompanied by the amendment to the employment contract and other supporting documents mentioned in the form.

The nature of these documents will depend on the employer's choice regarding the payment of the progressive pension allowance. The employer must provide the insured person with the necessary documents so that they can complete the application form. Additional documents may be requested from the employer if necessary in order to process the application.

The form must be received by the CNAP no later than two months before the expiry date of the amendment to the employment contract.

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