Pension Savings Simulator: Returns & Tax Benefits
Calculate your supplementary pension in Luxembourg
Your capital at maturity
Your tax advantage
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How do I use our pension simulator?
It couldn't be simpler! Just enter a few key details, such as :
- Your age at the start of your pension contract (up to a maximum age of 64)
- The age at which you plan to close it (between 60 and 75 years old)
- The amount you wish to pay each month on your retirement savings plan
- Your risk profile (and therefore the type of fund in which you wish to invest your money)
- And your annual income (to determine your tax savings)
In just a few clicks you can discover the potential of your Luxembourg pension savings. Our advanced simulator allows you to view :
- the capital you can build up for your retirement depending on the investment strategy chosen
- immediate tax savings thanks to the tax benefits of contract 111bis.
In just a few seconds, you'll get a detailed projection of your future capital and the tax savings you can expect this year. You'll know whether it makes sense for you to open a pension contract in Luxembourg.
Important information: Note that the term of the pension contract must be at least 10 years. (this is the legal minimum to benefit from tax deductions in Luxembourg). If you close it before then, you will have to repay the tax benefits.
Understanding the simulator's key figures
Once you have carried out your simulation, there are a number of indicators to help you understand how your pension savings are performing:
Concerning the return on your pension:
- Capital at maturity : This is the amount generated over the lifetime of the contract (including your payments and the interest generated).
- Total amount paid : This is the sum of all your contributions over the term of the contract.
- The added value generated : This is the financial gain in interest from your pension savings plan. It depends heavily on the type of fund chosen and the capital invested. Please note: this is an estimate based on average past values.
Regarding the tax benefits of your retirement savings :
- Annual tax savings : This is the amount you save each year thanks to the tax deductibility of your payments, calculated according to your tax bracket. In Luxembourg, you can deduct up to 4500€ a year from your tax.
- Actual annual cost : is the annual amount actually invested in your retirement savings (this allows you to compare it with the tax savings and thus see the extent to which Luxembourg is subsidising your retirement)
- Total tax savings : These are the tax credits obtained over the entire term of the pension contract.
What do you need to do depending on your situation in Luxembourg?
Here are a few tips for a realistic simulation of your pension savings plan. This is the advice generally given by wealth management experts:
- If you are a young professional (aged 25-35) : Choose an aggressive or dynamic profile with an expected return of 7-9% per annum. Your long-term horizon allows you to overcome temporary fluctuations and aim for maximum performance.
- If you are in mid-career (aged 35-50): Opt for a balanced profile (5% per year) that combines growth and stability. Adjust gradually towards greater security as you approach 50.
- If you are close to retirement (aged 50-60): Concentrate on a secure profile (2.5% per annum) to preserve the capital already built up and avoid unpleasant surprises as maturity approaches.
- If you live in Belgium or France : Maximise the tax advantage in Luxembourg by paying in the maximum authorised amount, as this advantage more than offsets the tax on withdrawal in your country of residence.
What are the returns on pension savings in Luxembourg?
When it comes to returns on a pension contract, the first thing to bear in mind is that past returns are no guarantee of future gains. Banks and insurance companies can only show you past returns, which give you an idea of the fund's performance.
However, there are a number of reasons for this, there is no guarantee of remuneration (unless you opt for a guaranteed rate, which will be lower - close to the interest rate on a savings passbook).
Current yields in Luxembourg
The performance of retirement savings contracts varies considerably depending on the insurer and the management profile chosen. Here is a detailed overview of the returns observed in 2026:
- Guaranteed profiles (capital protection) : Luxembourg euro funds are expected to generate net returns of between 1.81% and 2.51% in 2026, outperforming French euro funds thanks to the less restrictive management practices of Luxembourg insurers.
- Balanced profiles (50% equities / 50% bonds) : The average performance is between 4.2% and 5.8%, depending on the manager. These are generally the preferred investments of mid-career workers.
- Dynamic profiles (70-80% shares) : Returns ranged from 6.5% to 8.2%, driven by strong exposure to the US and European equity markets, which are growing steadily.
- Offensive profiles (90% actions) : The best performers reach 9.1% to 10.3%, but with high volatility, which requires a long investment horizon (minimum 15 years). These funds are often preferred by young people working in the tech or finance sectors.
Good to know: These returns are net of management fees but before exit tax. The impact of fees varies from 0.5% to 1.2% depending on the contract, directly influencing your final performance.
What are the returns on pension contracts over 20 years?
Over 20 years, even including crises, balanced profiles have delivered an average annual return of 5.3%. Here are the different periods we have been through:
- A growth phase from 2004 to 2008: The dynamic profiles posted average returns of 7.8% per annum, supported by the property bubble and strong economic growth.
- A financial crisis from 2008 to 2012This was accompanied by high volatility and temporary losses of up to -15% on equity profiles, but a full recovery in 2013 for investors who maintained their strategy.
- A period of strong growth from 2013 to 2019: Exceptional returns driven by monetary policies favouring low rates and high yields: 8.2% on average for balanced profiles, 11.4% for dynamic profiles.
- The Covid crisis and the return of inflation from 2020 to 2024: with a successful adaptation and yields averaging 5.1% in a difficult environment.
What factors determine the return on pension savings?
There are 4 main types that can increase or decrease the return on your retirement savings from 30% to 50%.
1. Management fees
This is often the most underestimated factor, even though they can reduce your final capital by 15% to 25% over 30 years. These costs fall into 3 categories:
- High costs (around 1.2% per year): On a payment of €200/month for 25 years with a gross return of 5%, your final capital will be €94,500.
- Moderate costs (0.8% per year): In the same scenario, the final capital will be €101,200 (+€6,700)
- Competitive charges (0.5% per year): Same scenario = €105,800 final capital (+€11,300 VS 1st scenario)
Remember to negotiate management fees to obtain the best possible terms for your supplementary pension.
2. Your risk profile
Your choice of asset allocation influences 80% of your final return.
- If you choose a cautious profile (100% guaranteed funds) : the expected return is 2.2% per annum. The capital over 25 years at €200/month is €72,400. But the risk of loss is virtually nil.
- If you choose a balanced profile (50% equities / 50% bonds) : The expected return is 5.1% per annum. The capital becomes €118,600 (i.e. +64%).
- With a dynamic profile (70% equities) : Expected return 6.8% per annum. Capital over 25 years = €147,200 (+103% vs cautious). Annual volatility: 12-18%.
- For an offensive profile (90% shares) : Expected return 8.2% per annum. Capital over 25 years = €177,800 (+145% vs cautious). Annual volatility: 15-25%.
3. Management quality
Not all managers are created equal. The expertise of the management team can generate significant differences in performance:
- Top performers : Average outperformance of +1.2% per year thanks to tactical allocation and fund selection. Over 25 years, this represents +€28,500 in additional capital.
- Middle managers : Performance in line with benchmark indices, with no particular added value.
- Underperforming managers : Can destroy 0.5 to 0.8% of performance per year compared with the market, i.e. -€15,200 of final capital over 25 years.
That's why we recommend going with a quality company that has an expert team based in Luxembourg, and that offers total transparency on its portfolio management.
4. Investment diversification
The geographical and sectoral distribution of your investments has a direct impact on your performance and reduces risk:
- Optimum geographical diversification : 40% Europe / 35% North America / 15% Asia / 10% Emerging Markets. This allocation generated +0.7% in additional performance compared with the European 100% portfolio over 15 years.
- Sector diversification : Avoid over-concentration (max 25% per sector). Including defensive sectors (healthcare, utilities) reduces volatility by 15% without impacting yield.
- Temporal diversification : Monthly scheduled payments reduce the impact of volatility by 8% on average, thanks to dollar cost averaging.
Finally, your strategy will determine the performance of your pension savings plan. Here are some strategies commonly used by savers:
- The automatic glide path : you start with risky funds and gradually migrate to guaranteed investments as you get older
- Optimisation through exceptional payments : You take advantage of years when you have good income (bonuses) to maximise your tax deduction limit 4500€.
- Annual rebalancing : You rebalance your portfolio once a year towards a target allocation (depending on current events, your strategy, etc.).
- Negotiation of charges according to capital paid in : you can renegotiate your charges in line with the accumulation of capital. Don't hesitate to do this every 3-5 years, especially if your capital exceeds €100,000. Insurers may accept discounts of up to 0.2 or 0.4 points to retain their customers.
- Arbitration at the end of your career : 5 years before retirement, monitor market trends and act to secure your gains (by changing strategy or funds). You could preserve 10 to 15% of your capital, especially if there are major market corrections.
How can you maximise the tax benefits associated with your pension provision in Luxembourg?
What you need to know about the taxation of pension savings
- There is a strict individual tax deduction limit: Each taxpayer has 4500€ of deduction, non-transferable between spouses. A married couple can therefore deduct up to 9000€ per year, even if only one of them works.
- It is possible to combine other deductions: This ceiling is independent of other special expenses (mortgage interest, insurance). You can accumulate 4500€ of pension savings + 2,000€ of loan interest, for example (see our guide to the tax return).
- The deductible excess cannot be carried forward: Unlike in other countries, there is no carry-forward to subsequent years. If you pay in 6000€ in one year, only 4500€ will be deductible. The remaining 1500€ is lost for tax purposes (but will be invested as capital in your pension savings).
- There is a "prorata temporis" for new residents: If you become a Luxembourg tax resident during the year, the ceiling is calculated on a pro rata basis. If you take up residence in July (i.e. you are resident in Luxembourg for 6 months), you have a maximum ceiling of 2250€.
Conditions for benefiting from tax deductions linked to a Luxembourg pension contract
Eligibility for the tax deduction is subject to strict conditions, some of which have recently been tightened:
- The contract must be open for at least 10 years. This has been compulsory since 2022. Old 8-year contracts are no longer eligible for deductions for new payments.
- It is impossible to recover the funds before the age of 60, except in exceptional circumstances. An early exit leads to the reinstatement of all the tax deductions granted + penalties of 20%.
- You must be resident in Luxembourg for tax purposes at the time of each payment.. Otherwise, you will not be able to claim a tax deduction because it is linked to your liability to Luxembourg tax.
- Your pension contract must be approved by the authorities.. Only policies that comply with Article 111bis are eligible. To be on the safe side, you should select companies recognised for their expertise in pension savings (see our pension savings comparator)
Here are some special cases to be aware of:
- Cross-border teleworkers : Since 2022, teleworking days in France/Belgium no longer have an impact on eligibility, unlike other tax deductions.
- Binational couples : The non-resident spouse can open a policy and benefit from the deduction if the tax household is in Luxembourg.
- Recent pensioners : Tax deductions are possible for 2 years after retirement if Luxembourg tax residence is maintained.
New tax rules for pension contracts in Luxembourg
The 2022 reform has profoundly changed the tax landscape for pension savings:
- Taxation is more advantageous, with taxation at half the marginal rate on exit, capped at a maximum of 20% (instead of the full marginal rate). A pensioner with an annual income of €60,000 will be taxed at 16% instead of 33%, a saving of 17 percentage points.
- The terms of withdrawal at the end of the contract are more flexible:
- it is possible to withdraw the entire capital at once (100% instead of the previous maximum of 50%)
- plan phased withdrawals between the ages of 60 and 75, while benefiting from a half-tax rate.
- benefit from a tax-privileged life annuity (50% is taxed as a pension, 50% is exempt)
- It is possible to transfer the policy between insurers without losing tax priority (subject to 6 months' notice).
What are the tax advantages of a Luxembourg pension plan for expatriates?
Contrary to popular belief, pension savings plans are not just for people who intend to live in Luxembourg all their lives. Expatriates can also benefit from
Wealth managers often advise expatriates :
- Open a pension savings plan for as long as they live in Luxembourg
- Calibrate their payments to maximise their tax deductions
- Wait at least 10 years (even without payment) before recovering their capital once they have left Luxembourg. This is to avoid having to repay any tax benefits received.
It is also possible to leave your pension savings 'working' in Luxembourg even once you have left the country, and only ask to close them when you are approaching retirement.
Just remember to keep your bank or insurance company informed of any changes of address.
Frequently asked questions (FAQ)
What returns can you expect from Luxembourg pension savings?
Returns vary according to profile: 1.8-2.5% for guaranteed funds, 4.2-5.8% for balanced profiles, and 9.1-10.3% for offensive profiles. These performances are net of fees but before tax.
What risk profile should I choose for my pension savings, depending on my age?
Young professionals (25-35 years) prefer an aggressive profile (7-9% expected), 35-50 year-olds opt for a balanced profile (5%), and those close to retirement choose a secure profile (2.5%). The investment horizon determines the acceptable level of risk.
Is there a guaranteed return on pension savings in Luxembourg?
Yes, there are investments with guaranteed rates. However, these are relatively low and are close to the interest rates on savings books.
How can you optimise the management of your pension savings?
Diversify geographically (40% Europe, 35% North America, 25% other), rebalance annually, and gradually adapt your risk profile. Negotiate your fees every 3-5 years, especially if your capital exceeds €100,000.
What happens if I leave Luxembourg for my pension savings?
You can keep your policy even if you leave Luxembourg, but you will no longer be able to benefit from new tax deductions. Wait at least 10 years before surrendering your policy to avoid repaying any tax benefits received.
Are cross-border teleworkers eligible for Luxembourg pension savings?
Yes, since 2022, teleworking days in France or Belgium no longer have an impact on eligibility for tax deductions. Cross-border commuters retain their benefits even if they telework part of the time.
Is it possible to combine pension savings with other tax deductions in Luxembourg?
Yes, the 4500€ ceiling for pension savings is independent of other special expenses such as mortgage interest. You can accumulate all the deductions to which you are entitled.
How can I maximise the benefits of Luxembourg pension savings?
Pay in the maximum deductible amount (4500€/year), take advantage of high-income years to make exceptional payments, and maintain your strategy over the long term. Adapt your risk profile according to your age and investment horizon.
What are the costs of a pension savings contract in Luxembourg?
Management fees vary from 0.5% to 1.2% per year depending on the contract, and can reduce your final capital by 15% to 25% over 30 years. It is crucial to compare and negotiate these charges to optimise your return.
Is it possible to change fund managers or funds for retirement provision in Luxembourg?
Yes, since 2022 it has been possible to transfer your policy between insurers without losing the tax advantage. You can also change your asset allocation by making arbitrages as your situation changes.
What is the minimum duration of a pension contract?
The minimum legal period is 10 years to benefit from tax deductions. Any redemption before 10 years will result in the repayment of the tax benefits received plus penalties of 20%.
At what age can you get your pension savings back?
You can recover your capital from the age of 60, in full or by staggered withdrawals up to the age of 75. Early withdrawals before the age of 60 are only possible in strictly defined exceptional cases.
Can I continue to contribute after 60?
Yes, you can continue to make payments until the policy is effectively closed, as long as you remain resident in Luxembourg for tax purposes. This allows you to further optimise your tax deductions.