Pension income increasingly defines life after work as Europe’s population ages and public budgets tighten. Retirement outcomes differ sharply between countries, shaping comfort and security in later life. Some retirees enjoy stability, while others face constant financial strain.
Pensions remain the primary income source for older Europeans. Public transfers, mainly state pensions and benefits, provide about two thirds of senior income across the EU. This dependence links retirement wellbeing closely to national policy choices.
Despite this support, older people earn less than the wider population. Across 28 European countries, those over 65 receive about 86% of average income. This gap continues to drive concerns about inequality.
Retirement income falls short in many countries
OECD data shows deeper disparities in several regions. The income ratio drops below 70% in the Baltic states. Belgium, Denmark, and Switzerland also fall below 80%, despite strong economic performance.
To assess these differences, analysts compare average gross annual old-age pensions. This indicator highlights contrasts in economic strength and pension system design.
As of 2023, the most recent data available in late 2025, the EU average pension reaches €17,321 per year. This equals €1,443 gross per month, according to Eurostat. The figure conceals wide national variation.
Pension levels range from very low to very high
Across 34 European countries, average annual pensions vary dramatically. Turkey records €3,377, while Iceland reaches €38,031. Within the EU, Bulgaria posts €4,479, while Luxembourg leads with €34,413.
Several countries remain near the bottom. Average pensions stay below €8,000 in Bosnia and Herzegovina, Serbia, Montenegro, Croatia, Slovakia, Romania, Lithuania, Hungary, and Latvia. Many retirees depend on family support to cope.
The scale of disparity remains striking. The highest pension exceeds the lowest by more than ten times across Europe. Economic development and policy choices largely explain this divide.
Noel Whiteside, visiting professor at the University of Oxford, pointed to income gaps. He said poorer EU countries often require families to supplement pension income.
Major economies sit just above the EU average
The EU’s four largest economies cluster slightly above the average. Italy records the highest pension among them. Spain, France, and Germany follow closely.
All five Nordic countries also exceed the EU average. Strong welfare systems and broad coverage support higher retirement incomes.
Pension system structure shapes outcomes
Philippe Seidel Leroy, policy manager at AGE Platform Europe, stressed comparison challenges. Different pension systems make direct ranking difficult.
Germany, Spain, France, and Belgium rely heavily on pay-as-you-go state pensions. Occupational schemes remain smaller and cover limited sectors. These systems push per-capita pension spending higher.
David Sinclair, chief executive of the International Longevity Centre UK, highlighted system design. Political compromise and historical legacies shape pension outcomes. Similar age structures can still produce very different costs.
Cost of living changes the picture
Adjusting pensions for purchasing power narrows headline gaps. Purchasing power standards reflect national living costs. One PPS unit buys the same goods and services everywhere.
In PPS terms, pensions range from 6,658 in Bosnia and Herzegovina to 22,187 in Luxembourg. The highest-to-lowest ratio falls to 3.3. Nominal figures show a ratio above ten.
Whiteside highlighted added benefits in former Eastern bloc countries. Free healthcare, transport, and subsidised housing raise real value. Retirees often receive more for each euro.
Rankings shift after purchasing power adjustment
Spain and Turkey climb sharply after adjustment. Spain moves from 13th place to fourth. Turkey rises from last, 34th, to 25th.
Other countries lose ground. Switzerland drops from fifth to 15th. Slovakia falls from 27th to 33rd. High living costs erode pension value.
Sinclair warned that purchasing power does not remove all differences. Living standards also depend on housing costs, healthcare access, and work opportunities. Pension transfers alone never define retirement wellbeing.
Across the EU, pensions equal roughly three fifths of late-career earnings. In many countries, the share falls below 50%. This gap threatens adequate living standards. Pensioner poverty remains a serious issue across Europe.
