Pensions dominate political debate as Europe’s population ages and public budgets tighten. Retirement income differs sharply between countries, shaping living standards after working life ends. Some retirees enjoy security, while others face ongoing financial pressure.
Pensions remain the main income source for older Europeans. Public transfers, mainly state pensions and benefits, generate about two thirds of senior income across the EU. This structure links retirement outcomes closely to government policy.
Despite this support, seniors earn less than the wider population. Across 28 European countries, people over 65 receive about 86% of average income. This gap raises concerns about inequality and long-term welfare.
Income gaps persist in later life
OECD data reveals sharper disparities in several regions. The income ratio drops below 70% in the Baltic states. Belgium, Denmark, and Switzerland also fall below 80%, despite strong overall economies.
To analyse these differences, researchers 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 reaches €17,321 per year. This equals €1,443 gross per month, according to Eurostat. The figure masks large national differences.
Pension amounts differ dramatically across Europe
Across 34 European countries, average annual pensions span a vast range. Turkey records €3,377, while Iceland reaches €38,031. Among EU members, Bulgaria posts €4,479, while Luxembourg leads with €34,413.
Several countries sit 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 remains striking. The highest pension exceeds the lowest by more than ten times across Europe. Economic development and policy choices explain much of this gap.
Noel Whiteside, visiting professor at the University of Oxford, highlighted national income differences. He said poorer EU countries often depend on families to supplement pension income.
Large economies cluster near the EU average
The EU’s four largest economies sit 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 states and broad coverage lift retirement incomes across the region.
Pension design shapes national outcomes
Philippe Seidel Leroy, policy manager at AGE Platform Europe, stressed comparison challenges. Different pension systems make direct rankings 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, emphasised pension architecture. Political compromise and historical legacies shape outcomes. Similar age structures can still produce very different costs.
Cost of living changes the rankings
Adjusting pensions for purchasing power reduces headline gaps. Purchasing power standards reflect national living costs. One PPS unit buys the same basket of goods 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 comparisons exceed a ratio of ten.
Whiteside pointed to extra benefits in former Eastern bloc countries. Free healthcare, transport, and subsidised housing raise real value. Retirees often receive more for each euro.
Countries rise and fall after adjustment
Spain and Turkey climb sharply after purchasing power 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 erase all differences. Living standards also depend on housing, healthcare access, and work opportunities for older people. 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 decent living standards. Pensioner poverty remains widespread across Europe.
