Which country has the highest pension in the EU?

Key Takeaways

• The EU average old-age pension expenditure per beneficiary is 17,327 PPS per year. Luxembourg ranks first at 22,817 PPS. Slovakia ranks last at 7,079 PPS. In purchasing power terms, that is a 3.2x gap between the top and the bottom of the EU.
• Six EU countries average above 20,000 PPS per pensioner: Luxembourg, Austria, Spain, Italy, Denmark, and the Netherlands. All rank at least 21% above the EU average.
• The 9 lowest-ranked countries are all in Central and Eastern Europe. Slovakia ranks last at 7,079 PPS, which is 59% below the EU average.
• Germany ranks 11th at 17,554 PPS. It has more old-age pension recipients than any other EU member state (19.5 million), which spreads the EU’s largest total pension bill across more people.
• Countries at the top of the ranking rely on large, earnings-linked state pension systems that replace a high share of working income. Spain’s system replaces 77% of late-career earnings. Italy replaces 75%.

Old-Age Pension per Beneficiary in the EU

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Luxembourg ranks first in the EU for old-age pension expenditure per person, at 22,817 PPS per year. Slovakia ranks last at 7,079 PPS. That is a 3.2x difference, measured in Purchasing Power Standards (PPS). PPS adjusts for price differences between countries. A pension worth 10,000 PPS in Bratislava buys roughly the same goods as 10,000 PPS in Amsterdam. The ranking reflects how each country chose to structure its pension system.

Six EU countries average more than 20,000 PPS per pensioner:

• Luxembourg: 22,817 PPS
• Austria: 22,148 PPS
• Spain: 21,786 PPS
• Italy: 21,424 PPS
• Denmark: 21,169 PPS
• Netherlands: 20,988 PPS

Several of these countries operate large, state-run pension systems designed to replace a high share of a worker’s income. Spain’s state pension replaces 77% of late-career earnings on average. Italy’s replaces 75%. Both figures are among the highest in the EU. These systems collect contributions from current workers and pay them directly to current retirees. The higher a worker’s lifetime earnings, the higher the eventual pension.

Central and Eastern European Countries Account for Lowest Pensions

The nine countries at the bottom of the ranking are all in Central and Eastern Europe. Slovakia ranks last at 7,079 PPS per year. Three countries rank just above it:

• Lithuania: 7,676 PPS
• Croatia: 7,748 PPS
• Bulgaria: 7,984 PPS

Lower pension amounts in these countries trace largely to wage history. EU pension systems are mostly earnings-linked. That means that the more a person earned over their career, the higher their eventual pension. Countries that entered the EU with significantly lower wage levels carry correspondingly lower pension baselines. Decades of lower average wages feed directly into lower payouts today.

Germany Spends the Most on Pensions

Germany ranks 11th at 17,554 PPS per year. That places it 227 PPS above the EU average of 17,327 PPS.

Germany spends 342 billion PPS annually. It records the highest pension expenditure among EU countries. It also has more old-age pension recipients than any other EU country. Germany’s 19.5 million recipients make up more than one in five of all EU pensioners. It is followed by France at 17.3 million recipients. Spreading a large total budget across that many recipients produces a per-person figure close to the EU mean.

Pension expenditure per person is not simply a function of national wealth. Italy and Spain both face ongoing fiscal pressures, yet both rank in the EU’s top four. The deciding factor is how much of a worker’s income a pension system is designed to return. Countries that built earnings-linked systems to replace a large share of working income rank high. Countries building toward that baseline from a lower economic starting point tend to rank lower.