Pension income increasingly determines life after work as Europe’s population ages and public finances tighten. Retirement outcomes differ sharply between countries, shaping financial security and living standards. Some retirees live comfortably, while others face ongoing hardship.
Pensions remain the main income source for older Europeans. Public transfers, mainly state pensions and benefits, provide about two thirds of senior income across the EU. This reliance links retirement wellbeing closely to government policy.
Even with this support, older people earn less than the wider population. Across 28 European countries, people over 65 receive about 86% of average income. This gap continues to raise concerns about fairness and adequacy.
Seniors earn below national averages
OECD data shows deeper disparities in several regions. The income ratio falls below 70% in the Baltic states. Belgium, Denmark, and Switzerland also drop below 80%, despite strong economies.
To examine these differences, analysts compare average gross annual old-age pensions. This measure highlights contrasts in economic strength and pension system design.
As of 2023, the most recent data available in late 2025, the EU average pension stands at €17,321 per year. This equals €1,443 gross per month, according to Eurostat. The figure conceals wide national variation.
Pension incomes differ dramatically
Across 34 European countries, average annual pensions range from €3,377 in Turkey to €38,031 in Iceland. Within the EU, Bulgaria reports €4,479, while Luxembourg tops the table 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 rely heavily on family support.
The disparity is 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, highlighted income gaps. He said poorer EU countries often depend on families to supplement pension income.
Large economies sit near the EU average
The EU’s four largest economies cluster just 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 systems shape 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 raise per-capita pension spending.
David Sinclair, chief executive of the International Longevity Centre UK, emphasised system design. Political compromises and historical legacies shape pension outcomes. Similar age structures can still produce very different costs.
Adjusting for cost of living narrows gaps
Pension differences shrink when measured by purchasing power standards. One PPS unit buys the same basket of goods and services in every country.
In PPS terms, pensions range from 6,658 in Bosnia and Herzegovina to 22,187 in Luxembourg. The highest-to-lowest ratio drops 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 increase real value. Retirees often get more for each euro.
Countries rise and fall after adjustment
Spain and Turkey climb sharply after PPS 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 reduce pension value.
Sinclair warned that purchasing power cannot erase 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 widespread across Europe.
