The «golden age» of pensions in Europe that characterized the post-war period is drawing to a close, as governments are called upon to confront an increasingly difficult equation: fewer workers, more retirees, increased fiscal obligations, and a greater need for supplementary savings.
The issue is highlighted in a report by the British The Telegraph, taking as its departure point the significant differences among European pension systems and the challenges posed by population ageing.
The comparison demonstrates that, despite shared demographic pressures, European countries are pursuing different models.
Some rely primarily on public pensions, while others have developed robust occupational and private pension systems.
Britain and the fiscal limits of the state pension
In the United Kingdom, the full new state pension for the 2026-2027 fiscal year stands at 241.30 pounds per week, an amount corresponding to 12,547.60 pounds annually, based on 52 weeks.
Establishing eligibility for the full new state pension typically requires 35 qualifying years of contributions to the National Insurance system, although for certain insured individuals, particularly those with contribution histories prior to April 2016, different calculations apply.
The amount of the British state pension is relatively limited compared to the income earned by a worker prior to retirement. However, this also reflects the structure of the British system, in which occupational and personal savings play a significant role.
According to the Pensions at a Glance 2025 report by the Organisation for Economic Co-operation and Development (OECD), the total gross replacement rate for an average earner with a full career is estimated at 44.7% in the United Kingdom.
The replacement rate reflects the relationship between the pension and pre-retirement earnings.
The higher it is, the greater the share of previous income the worker theoretically retains upon leaving the labor market.
In the British example, the OECD model assumes retirement at the age of 68.
Spain and Italy: Higher income replacement
The disparities among European countries are particularly wide.
In Spain, the gross replacement rate for an average earner reaches 80.4%, while in Italy it stands at 70.6%.
In France the corresponding figure is 56.6% and in Germany 42.1%.
The comparison highlights divergent social security philosophies.
Southern European nations maintain, in several cases, higher theoretical replacement rates through mandatory insurance systems, whereas other states rely more heavily on supplementary pension benefits.
However, high replacement rates do not necessarily signify that retirees enjoy greater purchasing power.
The real value of pensions also depends on wage levels, taxation, social security contributions, inflation, and the cost of living.
Furthermore, OECD calculations are theoretical simulations for workers entering the labor market at age 22, earning the average wage, and working without interruption until retirement age.
They do not, therefore, necessarily reflect the actual pension amounts received today by current retirees.
Netherlands and Denmark: The decisive role of occupational funds
A different picture is presented by the Netherlands and Denmark, where pension protection rests on a combination of state benefits and funded or occupational systems.
In the Netherlands, the public tier provides relatively limited replacement of previous income.
Yet when mandatory occupational pensions are added, the total gross replacement rate reaches 74.7%.
Similarly, in Denmark the state pension is supplemented by employment-linked occupational insurance schemes.
This model enables the diversification of pension income sources between public transfers and accumulated capital.
At the same time, however, it makes the final pension more dependent on factors such as duration of employment, contribution levels, investment returns, and the quality of asset management.
Britain is also moving in this direction, as employer and personal pension contributions constitute an essential supplement to the state pension.
The demographic crisis changes the rules
The most significant structural problem for European systems is the shifting ratio of workers to retirees.
Rising life expectancy means pensions are paid out over more years, while low birth rates restrict the younger generations entering the workforce.
The pressure is particularly acute in pay-as-you-go systems, in which the contributions of current workers largely finance the pensions of current beneficiaries.
As the number of workers declines relative to retirees, maintaining benefits without additional funding, increased employment, or changes to retirement rules becomes increasingly difficult.
Governments thus face four fundamental choices: increasing contributions and tax revenues, extending working lives, curbing pension growth, or expanding occupational and private insurance.
In practice, most European countries are attempting different combinations of these policies.
The critical question is not only how to rein in fiscal costs, but also how to ensure a dignified income for future retirees.
What the European Commission projects for the coming decades
Long-term fiscal projections by the European Commission reinforce concerns regarding the adequacy of future pensions.
In the 2024 Ageing Report, which spans the period up to 2070, a decline in the ratio of the average pension to the average wage is projected across the majority of member states.
The decline in this indicator acts as a brake on future public pension expenditure.
According to the report, this effect corresponds, on average across the EU, to a reduction in projected expenditure of 3.1 percentage points of GDP by 2070, compared to a baseline scenario without this specific effect.
This is not equivalent to a corresponding decline in total pension spending.
This shift highlights a critical economic dilemma: fiscal sustainability of the systems can be strengthened by constraining future benefits, but this increases the risk of inadequate retirement income.
The end of the «golden age» does not necessarily mean nominal pension cuts. It may mean that pensions will grow more slowly than wages, or that workers will require more years of insurance and supplementary savings to preserve their standard of living.
For Greece, as for the rest of Europe, the issue is not limited to the headline pension amount.
It is directly linked to productivity, real wages, employment, and the capacity of younger generations to finance an ageing social security system.
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