Whether people save diligently or ignore pensions, retirement dominates political debate as Europe ages and budgets tighten. Pension income varies widely across Europe, raising sharp questions about fairness and living standards. Some retirees enjoy financial security, while others struggle to cover basic costs.
Pensions provide 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 heavy reliance exposes retirees to national policy choices and fiscal pressures.
Despite these transfers, people over 65 earn less than the general population. Across 28 European countries, seniors receive about 86% of average income. This gap shapes debates about dignity, poverty, and intergenerational fairness.
Income gaps remain stark for older Europeans
OECD data shows deeper shortfalls 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 understand these gaps better, analysts compare average gross annual old-age pensions. This measure highlights structural differences between national systems and economic strength.
As of 2023, the latest data available in late 2025, the EU average pension reached €17,321 annually. This equals €1,443 gross per month, according to Eurostat. The figure masks enormous variation between countries.
Huge differences in average pension levels
Across 34 European countries, average annual pensions range widely. Turkey records €3,377, while Iceland reaches €38,031. Within the EU, Bulgaria sits at €4,479, while Luxembourg leads with €34,413.
Several countries cluster near the bottom. Average pensions stay below €8,000 in Bosnia and Herzegovina, Serbia, Montenegro, Croatia, Slovakia, Romania, Lithuania, Hungary, and Latvia. These levels strain household budgets and family support systems.
The contrast remains striking. The highest pension exceeds the lowest by more than ten times across Europe. Economic development and welfare design drive this divide.
“Noel Whiteside, visiting professor at the University of Oxford, explained that poorer EU countries rely more on family support. Families often subsidise elderly relatives and fill pension gaps,” he said.
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 behind.
All five Nordic countries also exceed the EU average. Strong welfare states and broad coverage lift pension outcomes across the region.
Retirement systems differ sharply across Europe
Philippe Seidel Leroy, policy manager at AGE Platform Europe, stressed comparison difficulties. Different pension systems complicate direct ranking between countries.
Germany, Spain, France, and Belgium rely heavily on pay-as-you-go state pensions. Occupational schemes remain smaller and limited to certain sectors. These structures raise per-capita pension spending.
David Sinclair, chief executive of the International Longevity Centre UK, highlighted system design. Political compromise and historical legacies shape pension costs. Similar age profiles can still produce very different outcomes.
Purchasing power changes the picture
Adjusting pensions for purchasing power reduces headline gaps. Purchasing power standards reflect living costs, equalising buying capacity across countries. One PPS unit buys the same basket everywhere.
In PPS terms, pensions range from 6,658 in Bosnia and Herzegovina to 22,187 in Luxembourg. The highest-to-lowest ratio shrinks to 3.3. Nominal comparisons exceed a ratio of ten.
Whiteside noted special benefits in former Eastern bloc countries. Free healthcare, transport, and subsidised housing boost real value. Retirees often receive more services for less money.
Spain and Turkey climb in PPS rankings
Spain and Turkey rise sharply after PPS adjustment. Spain moves from 13th to fourth place. Turkey climbs from last, 34th, to 25th position.
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 PPS does not tell the full story. Living standards depend on housing, healthcare access, and job opportunities for older workers. Pension transfers alone never determine retirement wellbeing.
Across the EU, pensions equal roughly three fifths of late-career earnings. Many countries fall below 50%. This shortfall makes decent living standards harder. Pensioner poverty remains a serious issue across Europe.
