Investing in ETFs within your pension savings: a simple way to prepare for retirement

November 24, 2025

Investing in ETFs as part of your pension savings is attracting an ever-growing number of savers. This approach combines tax advantages, diversification and ease of use. If you would like to understand how ETFs can complement a retirement strategy and what this means in practical terms for your savings, this article sets out the key points.

What exactly are ETFs?

An ETF is an investment vehicle that tracks a well-known stock market index, such as the MSCI World or the S&P 500. Instead of selecting individual shares or bonds yourself, you invest in a diversified basket in a single transaction.
The ETF then moves in line with the index it replicates, making it a straightforward tool to grasp.

Key points to remember

Immediate diversification: a single ETF can include hundreds of companies.
Generally lower fees than actively managed funds.
Transparency: it is easy to see exactly what an ETF holds.
Easy to buy and sell: it is traded on the stock exchange like a share.

Pension savings in Luxembourg: a favourable framework

A pension savings plan allows you to set money aside for retirement while benefiting from a tax advantage.
Under Article 111bis of the tax law, you may deduct up to 3,200 euros per year from your taxable income, provided you keep the contract for at least 10 years and access the funds past the age of 60. When the plan matures, the tax treatment will depend on the country where you live.

The amounts paid in can be invested in different vehicles:

Guaranteed funds
Bond and equity funds
ETFs, if the insurer offers them.

Why choose ETFs in your pension savings?

A modern way to invest

Integrating ETFs into your pension savings offers a number of notable advantages:

Lower fees, which can improve returns over time
Access to a wide range of markets, including international ones
Greater clarity over the underlying holdings
A passive approach that reduces the need for complex management decisions

Savings that can be tailored to your preferences

ETFs allow your holdings to reflect your objectives or personal interests:

Themes (commodities, energy transition)
Geographic regions (Europe, United States, Asia)
Sustainable approach through ESG ETFs

A still rare option in Luxembourg

Not all insurers offer ETFs within their pension savings contracts.

At present, Baloise Assurances is the only insurer providing this option in a pension savings product.

An advantage for the saver

Choosing a contract that includes ETFs can offer:

Greater flexibility in the way you invest
Easier adaptation to market changes
The opportunity to build a personalised strategy according to your risk profile

ETFs can be an appealing option for preparing for retirement in Luxembourg: simple, transparent and accessible, they offer an effective way to diversify your savings.
As with any investment, the choice should be considered carefully and aligned with your investor profile. Getting advice can be helpful in selecting the ETFs that best match your objectives.

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FAQs: ETFs and pension savings

Are contributions still tax-deductible if I choose ETFs?

Yes, the maximum annual tax deduction of 3,200 euros remains valid, regardless of the investment vehicle selected. The tax treatment upon withdrawal also remains the same.

Are ETFs riskier?

Their level of risk depends on the index they track. They are not necessarily riskier than traditional funds.

Do all pension savings plans allow investment in ETFs?

No. As of today, only Baloise in Luxembourg offers this option through its Pension Plan product.

How should you choose your ETFs?

It is advisable to seek information or advice, and to ensure consistency with your investor profile.

What types of ETFs can be found in a pension savings plan?

Depending on the insurer: equity ETFs, bond ETFs, thematic ETFs, sector-based ETFs, or ESG ETFs.