Luxembourg: Selected Issues

May 10, 2019

Preview Citation

Format: Chicago

Luxembourg: Selected Issues, (USA: International Monetary Fund, 2019) accessed December 21, 2024

Summary

This Selected Issues paper studies the fiscal and macroeconomic impact of different reform options. It analyzes the impact of an increase in the contribution rate, a reduction of benefits, and an increase in the retirement age. Although all reform options can lead to the fiscal sustainability of the system, there are important macroeconomic trade-offs among them. Although the Luxembourg’s pension system is sound over the near term, further reforms are needed to ensure its long-term sustainability. This paper explored the fiscal and macroeconomic impact of several reform options: an increase in the contribution rate, a reduction of benefits, and an increase in the retirement age. Although all these reforms would help ensuring fiscal long-term sustainability, there are important macroeconomic trade-offs. Even though an increase in contribution rates can be implemented immediately, it introduces distortions in the labor market which lead to a decline in GDP in addition to a decline in consumption.

Subject: Aging, Expenditure, Labor, Pension reform, Pension spending, Pensions, Population and demographics, Retirement

Keywords: Aging, Consumption, Contribution rate, CR, EC's Ageing Report, Europe, GDP, GDP share, Global, Income, ISCR, Life cycle income, Pension expenditure, Pension reform, Pension reserve, Pension spending, Pension system, Pensions, Replacement rate, Retirement, Retirement age

Publication Details

Pages:

15
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2019/131
Stock No:

1LUXEA2019002
ISBN:

9781498314589
ISSN:

1934-7685

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