Pension income shapes life after work as Europe’s population ages and state budgets tighten. Retirement outcomes differ widely between countries, creating sharp contrasts in later-life security. Some retirees live comfortably, while others struggle to make ends meet.
Pensions remain the main income source for older Europeans. Public transfers, mainly state pensions and benefits, deliver about two thirds of senior income across the EU. This reliance ties retirement wellbeing closely to government policy and fiscal health.
Even with this support, older people earn less than the wider population. Across 28 European countries, those over 65 receive about 86% of average income. This persistent gap fuels debate about fairness and adequacy.
Seniors fall behind average earners
OECD data shows deeper shortfalls in several regions. The income ratio drops below 70% in the Baltic states. Belgium, Denmark, and Switzerland also slip below 80%, despite strong economies.
To explore these differences, analysts compare average gross annual old-age pensions. This measure reveals how wealth and system design shape retirement income.
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 average conceals major national variation.
Pension amounts range from modest to generous
Across 34 European countries, average annual pensions vary enormously. Turkey records €3,377, while Iceland reaches €38,031. Within the EU, Bulgaria posts €4,479, while Luxembourg tops the ranking 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.
The disparity remains stark. The highest pension exceeds the lowest by more than ten times across Europe. Economic development and welfare policy drive this divide.
Noel Whiteside, visiting professor at the University of Oxford, pointed to income gaps. He said poorer EU countries often rely on families to subsidise elderly relatives.
Big economies sit close to the EU average
The EU’s four largest economies cluster just above the average. Italy delivers 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 support higher retirement incomes.
Pension systems explain the differences
Philippe Seidel Leroy, policy manager at AGE Platform Europe, stressed comparison limits. Different pension systems complicate direct comparisons.
Germany, Spain, France, and Belgium depend heavily on pay-as-you-go state pensions. Occupational schemes remain smaller and cover selected sectors. These structures lift per-capita pension spending.
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 reshapes pension rankings
Adjusting pensions for purchasing power narrows headline gaps. Purchasing power standards reflect national living costs. One PPS unit buys the same 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 figures show a ratio above ten.
Whiteside noted extra benefits in former Eastern bloc countries. Free healthcare, transport, and subsidised housing boost real value. Retirees often get more for their money.
Who gains and who loses after adjustment
Spain and Turkey rise sharply after purchasing power adjustment. Spain jumps from 13th place to fourth. Turkey climbs from last, 34th, to 25th.
Other countries slide down the table. 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 gaps. 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 adequate living standards. Pensioner poverty remains a major issue across Europe.
