111bis pension savings: the ceiling rises to €4,500 in 2026
A 40% increase in the tax deduction for pension savings — what it changes in practice, who benefits most, and how to choose your contract.
Comparison last updated: July 2026, from the insurers’ public documentation.
What changes on 1 January 2026
The maximum deductible amount for pension savings (article 111bis of the income tax law) rises from €3,200 to €4,500 per year per taxpayer. The ceiling had been frozen at €3,200 since 2017; the 40% increase enacted at the end of 2025 is confirmed by the Luxembourg direct tax administration (ACD) and listed among the Ministry of Finance’s 2026 tax changes. Another simplification inherited from the 2017 reform: the ceiling is the same regardless of your age.
The mechanism, in short
A pension-savings contract is a retirement-horizon product, offered by insurers and some banks, whose premiums are deducted from your taxable income as special expenses. In exchange for the tax advantage, the framework is strict:
- Minimum duration of 10 years;
- Subscription before age 65;
- Payout between 60 and 75;
- No early surrender, except serious illness or invalidity.
At maturity you choose between capital, a life annuity, or a combination. Capital is taxed at half the global rate; a life annuity is 50% tax-exempt.
How much do you actually save?
The saving depends on your marginal tax rate: deducting €4,500 erases the tax that would have hit those €4,500 of income. At the top marginal rate (42%, excluding the employment fund contribution), the saving reaches about €1,890 per year — and exceeds €2,000 once the contribution is included. At intermediate rates, count several hundred euros. Two practical consequences: the higher your income, the more profitable the 111bis; and in a jointly taxed couple, each spouse can subscribe their own contract and deduct their own ceiling — up to €9,000 of deduction per household.
Which contract should you choose?
The tax advantage is identical everywhere: the difference lies in the financial engine, fees and flexibility. The market’s four main contracts:
| Contract | Financial engine | From | Distinctive feature |
|---|---|---|---|
| easyLIFE Pension (LALUX) | Guaranteed rate (Security) or investment units (Performance) | €25/month | Death floor = premiums paid |
| MySmartPension (AXA) | Guaranteed base at 1.25% + investment units | €50/month | Lifecycle management (decreasing risk) |
| Pension Plan (Baloise) | Piloted, profiled or free management | €50/month | ETF access and ESG options |
| horizon (Foyer) | Investment units (CapitalatWork) | — | ESG funds, partial capital protection |
The structuring choice remains guaranteed rate versus investment units: capital safety on one side, return potential on the other. Our life insurance comparison details the four offers side by side.
In practice
- Pay before 31 December: only premiums paid within the tax year are deductible for that year.
- Already have a contract? The new ceiling applies automatically: simply increase your payments to benefit from the additional €1,300.
- Tax return: premiums go under special expenses in your annual declaration.
- Don’t confuse it with article 111 (€672/year per person for classic insurance premiums): the two ceilings can be combined.
Your questions, answered
I already have a 111bis contract: do I need to do anything to benefit from the €4,500?
No, the new ceiling applies automatically from the 2026 tax year. To make full use of it, simply increase your payments by €1,300 per year — most contracts allow you to adjust premiums or make an additional payment before 31 December.
Are we limited to €4,500 as a couple?
No. The ceiling applies per taxpayer: in a jointly taxed couple, each spouse can subscribe their own contract and deduct up to €4,500 — €9,000 of deduction per household — provided each holds their own contract.
What happens if I break my contract before 60?
Early surrender is only allowed in case of serious illness or invalidity. Outside those cases, an early payout triggers taxation of the capital by assessment — the tax advantage is effectively clawed back. The 111bis is a long-term commitment, to be sized against your sustainable saving capacity.
Can the 111bis be combined with the deduction for my other insurance policies?
Yes. Article 111bis (€4,500/year for pension savings) is separate from article 111, which allows deducting up to €672 per year per household member for classic insurance premiums (liability, complementary health, outstanding balance…). The two ceilings can be combined in your tax return.
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