Highest and lowest European pension rates: Which nations offer the most and least financial support to retirees.
Europe's Pension Gap: A Continent-Wide Concern
The adequate provision of pensions across the European Union remains a pressing issue as women continue to receive significantly lower pensions than men, and disparities in pension levels persist across countries.
According to the OECD's Pension at a Glance 2023 report, public transfers, such as state pensions and benefits, account for over 70% of older adults' total equivalised gross household income in many European nations, surpassing 80% in some cases.
In the EU, the average pension expenditure per beneficiary for old-age pensions was €16,138 in 2022, equating to approximately €1,345 per month. This figure ranged from €3,611 in Bulgaria to €31,385 in Luxembourg. When EFTA and EU candidate countries are included, the range widens, from €1,648 in Albania to €35,959 in Iceland.
The Nordic countries lead the way in terms of higher average pensions, with an average old-age pension per beneficiary exceeding €30,000 in Norway and Denmark. Pension levels were also significantly above the EU average in Sweden and Finland.
EU candidates have the lowest pensions, with besides Albania, Turkey (€2,942), Bosnia and Herzegovina (€3,041), Serbia (€3,486), and Montenegro (€3,962) also having the lowest average pensions.
The EU's 'Big Four' economies ranked consecutively, all above the EU average. Italy had the highest average pension among them at €19,589, followed by France (€18,855), Spain (€18,100), and Germany (€17,926).
Despite these averages, inequalities in average pensions are significantly narrower when measured in purchasing power standards (PPS) compared to nominal terms. For instance, within the EU, the ratio between the highest and lowest average pension is 8.8 in nominal terms, but it drops to 3.5 in PPS.
The report also highlights that older women face higher poverty risks than men in every EU country, with an average difference of 26.1% in pension income. Additionally, 5.3% of women receive no pension at all, a gap rooted in gender pay disparities, shorter or interrupted careers, and a higher incidence of part-time work among women.
Furthermore, according to the 2024 Pension Adequacy Report, future pension adequacy remains under pressure, and the risk of poverty and social exclusion among older people has continued to rise since 2019, primarily driven by increasing relative income poverty.
In light of this, it is crucial for European countries to reassess their pension systems, with regional differences in living costs and gender gaps in mind, to ensure the financial security and well-being of their elderly citizens.
References:
[1] European Commission (2023) Pension Adequacy Report, 2024
[2] Eurostat (2023) Pensions in the EU: Key facts and figures
[3] Eurostat (2022) Demographic changes and their impact on pension systems
Engaging in proactive financial planning and personal finance management could help bridge the wealth gap among European citizens as they approach retirement. Seeking guidance from professional wealth-management firms might help individuals optimize their savings and investments, leading to more substantial future pensions.
With the focus on gender inequalities in retirement savings, organizations offering specialized financial advice, such as personal-finance experts and women-centric wealth-management institutions, could play a pivotal role in empowering women to secure financial stability during their golden years.
