State Pensions in Europe: Which Cover Living Costs Best?

Overview of State Pensions and Cost of Living in Europe

A recent study by payroll and HR firm Moorepay highlights the varying adequacy of state pensions across European countries when it comes to covering living costs. The research reveals that in 20 out of 39 European countries, state pensions do not cover the cost of living, excluding rent. If rent were included, this number is likely to increase significantly.

The analysis focuses on the percentage of living costs covered by state pensions as of late 2025. Across the 39 countries, including EU members, candidate countries, EFTA countries, and the UK, the share of pensions relative to living costs ranges from 22% in Georgia to 225% in Luxembourg.

This data reflects the living cost for a single person with one pension. While Moorepay gathered average pension data, the cost of living information comes from Numbeo and represents national averages. It’s important to note that these figures can vary depending on the city within a country.

Countries with High Pension Coverage

Luxembourg stands out as a country where state pensions significantly exceed living costs. The average state pension in Luxembourg is €28,790, while the cost of living is €12,791. This results in a surplus of €15,989, meaning the pension is more than twice the cost of living.

Other countries also show strong pension coverage:
– Italy (210%)
– Finland (208%)
– Spain (199%)
– Denmark (189%)

Several other countries fall between 150% and 180% of living costs, which is still relatively high. These include:
– Iceland (179%)
– Norway (178%)
– Germany (176%)
– Belgium (170%)
– Austria (165%)
– France (160%)
– Netherlands (159%)
– Sweden (158%)

Moderate Pension Coverage

Six countries have pension coverage between 100% and 150%, indicating that pensions are sufficient to cover living costs but with limited surplus. These countries include:
– Switzerland (131%)
– Ireland (126%)
– UK (120%)
– Poland (112%)
– Czechia (108%)
– Greece (103%)

Countries with Insufficient Pension Coverage

Pensions are not enough in 20 countries. In some cases, they cover over 80% of living costs, such as:
– Slovenia (95%)
– Slovakia (94%)
– Estonia (91%)
– Portugal (90%)
– Montenegro (89%)
– Lithuania (85%)
– Croatia (82%)
– Hungary (81%)

However, several countries fall below 65%:
– Albania (29%)
– Ukraine (29%)
– Moldova (42%)
– Georgia (22%)

Other countries with low pension coverage include:
– Bosnia and Herzegovina (53%)
– Cyprus (58%)
– North Macedonia (61%)
– Turkey (64%)
– Latvia (65%)

Regional Disparities

Noel Whiteside, visiting professor at the University of Oxford, highlighted that some EU countries are simply poorer than others, requiring families to subsidize the pension income of elderly relatives.

There is a clear geographic trend:
– Northern and Western Europe, including Nordic countries, often have pensions that cover or exceed basic living costs.
– Central Europe sees moderate pension coverage.
– Eastern Europe and the Balkans typically have pensions that cover only part of living costs.

Average Pension Expenditure Per Beneficiary

Euronews Business calculated the “average pension expenditure per beneficiary” to illustrate which countries offer the highest pensions. This reflects gross old-age pensions based on Eurostat data. However, Moorepay used a different methodology, collecting data from domestic sources, including news outlets.

Older people in Europe rely mainly on pensions for their income. Two-thirds (66%) of the income of people aged 65 and over in Europe comes from public transfers according to OECD.

Private occupational pensions have significant shares in some European countries. A Euronews article, “Where do older Europeans get their money?”, explores the income sources of older people.

David Sinclair, chief executive of the International Longevity Centre UK, noted that each nation’s pension architecture is a significant driver of pension levels.