Retirement dominates political debate as Europe’s population ages and public finances tighten. Pension income differs sharply across the continent, shaping living standards in later life. Some retirees enjoy comfort, while others face persistent financial pressure.
Pensions provide the main income source for older Europeans. Public transfers, mainly state pensions and benefits, generate about two thirds of senior income in the EU. This dependence ties retirement security closely to national policy choices.
Despite this support, people over 65 earn less than the overall population. Across 28 European countries, seniors receive around 86% of average income. This gap fuels concerns about fairness and social cohesion.
Older Europeans still lag behind average incomes
OECD figures show deeper gaps in several regions. The income ratio drops below 70% in the Baltic states. Belgium, Denmark, and Switzerland also fall below 80%, despite strong national economies.
Analysts often compare average gross annual old-age pensions to explore these gaps. This indicator highlights differences in wealth, labour markets, and welfare design.
As of 2023, the latest data available in late 2025, the EU average pension reached €17,321 per year. This equals €1,443 gross per month, according to Eurostat. The average conceals extreme national variation.
Pension levels range from very low to very high
Across 34 European countries, average annual pensions span a wide range. Turkey records €3,377, while Iceland reaches €38,031. Within the EU, Bulgaria stands at €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 in these states rely on family support.
The scale of disparity remains striking. The highest pension exceeds the lowest by more than ten times across Europe. Economic strength and pension design drive this divide.
Noel Whiteside, visiting professor at the University of Oxford, stressed national income gaps. He said poorer EU countries often require families to subsidise elderly relatives.
Big economies cluster near the EU average
The EU’s four largest economies sit 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. Broad welfare coverage and strong public systems support higher pension incomes.
Pension systems shape national outcomes
Philippe Seidel Leroy, policy manager at AGE Platform Europe, highlighted comparison limits. Different pension systems complicate direct rankings.
Germany, Spain, France, and Belgium rely heavily on pay-as-you-go state pensions. Occupational schemes remain smaller and cover limited sectors. These structures raise per-capita pension spending.
David Sinclair, chief executive of the International Longevity Centre UK, emphasised system architecture. Political compromises and historical legacies shape pension costs. Similar age profiles can still produce very different outcomes.
Purchasing power narrows the gap
Adjusting pensions for purchasing power changes the picture. Purchasing power standards reflect living costs 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 falls to 3.3. Nominal comparisons exceed a ratio of ten.
Whiteside noted added benefits in former Eastern bloc countries. Free healthcare, transport, and subsidised housing raise real value. Retirees often gain more for each euro.
Rankings shift after cost-of-living 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 slide down. Switzerland drops from fifth to 15th. Slovakia falls from 27th to 33rd. High living costs erode pension value.
Sinclair warned that PPS cannot erase differences. Living standards also depend on housing costs, healthcare access, and work opportunities for older people. Pension transfers alone never define retirement wellbeing.
Across the EU, pensions equal about three fifths of late-career earnings. In many countries, the rate falls below 50%. This gap threatens decent living standards. Pensioner poverty remains widespread across Europe.
