On Wednesday 25 February 2026, Luxembourg Chamber of Employees (Chambre des salariés - CSL) published new information the new progressive pension scheme that entered into force on 1 January 2026.
The reform, introduced by the law of 19 December 2025, aims to allow eligible employees to gradually reduce their working hours while receiving a partial pension benefit. Although the measure resembles progressive early retirement, the law treats the progressive pension as a separate scheme with its own eligibility criteria and procedures.
The progressive pension is not a genuine right of the employee but is subject to the prior agreement of the employer. Employees must be granted a reduction in working hours of at least 25% of their previous working hours by their employer, without the remaining working hours being less than sixteen hours per week.
Furthermore, unlike the progressive early retirement scheme, a progressive pension can only be granted to insured persons when they are also entitled to an early old-age pension, and not three years before that date.
According to CSL, employees must also prove that they have worked at least 75% of full-time hours during the three years preceding their admission to the progressive pension scheme, to be eligible for the new measure.
Before requesting reduced working hours, employees must obtain a certificate from the National Pension Insurance Fund (Caisse nationale d’assurance pension - CNAP) confirming the date on which they become eligible for early old-age pension.
Employees must then submit a formal request to their employer at least four months before the intended start date, together with the CNAP certificate. They may send the request by registered letter, hand delivery or email, provided they receive acknowledgement of receipt. Employers must respond within one month.
To activate the progressive pension, employees must forward the contract amendment confirming reduced working hours to the CNAP at least two months before implementation. Then CNAP will inform both employer and employee of eligibility no later than one month before the planned start. If the CNAP refuses approval, the amendment becomes null and void.
Eligible employees receive a progressive pension benefit alongside their reduced salary. The CNAP calculates the benefit by multiplying the early old-age pension amount (including the monthly end-of-year allowance) by the agreed reduction in working hours.
For example, an employee earning €5,000 per month who qualifies for an early pension of €3,000 and reduces working hours by 40% would receive €3,000 in salary and €1,200 as progressive pension benefit.
Employers pay the benefit directly to employees and recover the amount monthly from the CNAP, although the CNAP may pay employees directly upon employer request.
Tax authorities treat the benefit as an early old-age pension, which triggers the issuance of a second tax card. Social security deductions follow pension rules, including contributions of 2.8% for health insurance in kind and 1.4% for long-term care.
Entitlement under the scheme ends automatically in several cases:
• from the date on which the employee meets the conditions for an old-age pension at age 65;
• from the date on which the employee, at their request, becomes eligible for an early old-age pension or an invalidity pension;
• on the date of the employee’s death;
• on the date on which the employee takes up or resumes work exceeding the hours set out in the amendment agreed for admission to the scheme;
• from the date on which the employee takes up or resumes another activity that generates income exceeding, over a calendar year, half of the monthly minimum social wage applicable to the employee concerned.
CSL noted that in the case of an employee who has been made redundant as part of a collective redundancy, dismissed for reasons not related to their personal conduct, or whose employment has been terminated by operation of law, the CNAP pays the allowance directly to the employee.
