Countries with the highest and lowest pensions in Europe - How does Albania rank?
Pensions are the main source of income for older people in Europe, according to the OECD report "Pensions at a Glance 2023". In many European countries, public transfers, such as pensions and state benefits, account for over 70% of the total gross income of elderly households, exceeding 80% in some cases.
According to Eurostat, in 2022, the average pension expenditure per beneficiary for old-age pensions was €16,138 in the EU. This is equivalent to approximately €1,345 per month when divided over 12 months. The Nordic countries lead the way with the highest average pensions.
They ranged from €3,611 in Bulgaria to €31,385 in Luxembourg within the EU. When EFTA and EU candidate countries are included, the range widens from €1,648 in Albania to €35,959 in Iceland. The average old-age pension per beneficiary also exceeded €30,000 in two Nordic countries: Norway and Denmark. It was also significantly above the EU average in Sweden (€22,436) and Finland (€21,085).
EU candidates have the lowest pensions
Apart from Albania, EU candidate countries have the lowest average pensions. These include Turkey (€2,942), Bosnia and Herzegovina (€3,041), Serbia (€3,486) and Montenegro (€3,962). Montenegro ranks slightly above Bulgaria, but only by a small margin. These are annual, not monthly, figures, which show the wide gap between the lowest and highest pension levels in Europe.
The EU's "Big Four" economies are ranked in order, 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).
Huge differences in pension levels across Europe
Average pension figures show that:
· There is a strong East-West divide, with Western and Nordic Europe offering much higher pension benefits.
· Southern European countries generally perform better than Eastern ones, but still lag behind Northern Europe.
· The weakest performers are concentrated in the Balkans and the Eastern EU, especially among EU candidate countries.
Pension differences narrow significantly in PPS terms
Inequalities in average pensions are significantly narrower when measured in purchasing power standards (PPS) compared to nominal terms. For example, within the EU, the ratio between the highest and lowest average pension is 8.8 in nominal terms, but falls to 3.5 in PPS, reflecting changes in the cost of living.
In the EU, average pension expenditure per beneficiary ranged from 5,978 PPS in Slovakia to 21,162 PPS in Austria. When non-EU countries are included, Albania had the lowest figure of 3,019 PPS. Turkey ranked significantly higher in terms of PPS, with 8,128 PPS - placing it above several EU member states. All Nordic countries are above the EU average in pension expenditure, with some ranking among the highest in Europe.
Pensions fell in three places in 2022
In euro terms, the average pension fell in only three countries in 2022 compared to 2021, and by less than 5%. These were Turkey, Ireland and Greece. In Turkey, the decline was mainly due to a significant depreciation of the national currency, which affected the euro value of pensions.
In contrast, Bulgaria saw the largest increase at 33%, followed by the Czech Republic at 16%. Pension increases also exceeded 10% in Latvia, Lithuania, Montenegro and Romania. Old-age pensions are periodic payments intended to i) maintain the beneficiary’s income after retirement from paid work at the legal or standard age or ii) support the income of the elderly.
Is retirement income sufficient to maintain living standards?
According to the 2024 Pension Adequacy Report, prepared jointly by the European Commission and the Social Protection Committee, EU countries are taking further steps to safeguard adequacy, but future adequacy remains under pressure. Pension replacement rates for a given career are projected to decline over the next four decades.
The risk of poverty and social exclusion among older people has continued to increase since 2019, mainly driven by the rise in relative income poverty. In 2022, more than one in five people aged 65 and over in the EU, around 18.5 million individuals, were at risk of poverty or social exclusion. This number is increasing due to rising poverty rates and an ageing population.
In much of Europe, pension incomes fall far below pre-retirement incomes. This gap makes it difficult for many older adults to maintain their standard of living after they stop working.
Gender gap in pensions: Women receive significantly less
The report shows that older women face higher risks of poverty than men in every EU country. On average, women in the EU receive 26.1% less pension income than men, and 5.3% of women receive no pension at all. These gaps are rooted in gender pay gaps, shorter or interrupted careers and a higher incidence of part-time work among women.
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