The countries with the best (and worst) state retirement incomes

With millions of Brits surviving on a small State Pension, new research reveals the European countries with the most generous retirement incomes.

Despite a 4.1% increase in the State Pension this year, many UK retirees can still struggle to make ends meet.

And while the full Basic State Pension rate has risen to £11,973, or around £921 a month, a stealth hike in Income Tax also means that 1.6 million more pensioners will be paying Income Tax by 2028.

But how do those in other parts of Europe fare in their golden years?

According to Eurostat, in 2022, the average Government pension expenditure per individual was €16,138 in the EU – or £13,568.83. This equates to approximately €1,345 per month or £1,130.74 when divided over 12 months.

The most generous pension payers

Pensioners in Iceland can receive a generous €2,997 a month (£2,519.85) - around two and a half times as much as that in the UK. 

Below is a list of how the top 10 major European economies compare, ranked according to the maximum possible state-backed pension income.

Source: Eurostat/OECD

Everything you need to know about pensions

1. Iceland

With its dramatic scenery and association with the Vikings, Iceland is a beautiful place to retire to. It also offers its citizens universal healthcare. 

Public sector workers retire at the age of 65, while those working in the private sector retire at 67.

Pensioners can receive a maximum monthly income of more than £2,500 from the state, the most generous of the nations included in the research.

2. Luxembourg

The tiny duchy of Luxembourg comes in at number two in the list of the most generous pension providers in Europe. 

Pensioners there can expect to receive a maximum of £2,230.64 per month from the Luxembourg Government. 

Workers can contribute to the state pension scheme for a maximum of 40 years. If they have paid in for 40 years, they can retire at 60.

However, they can receive a pension from the age of 65, as long as they have contributed pension payments for a minimum of 10 years. 

How much you need to save for a comfortable retirement

3. Norway

Scandinavian countries are known for their generous welfare systems, and Norway is no exception. 

The country offers a maximum state-backed retirement income of £2,163.38, with payments based on in-work earnings.

Anyone who has worked in Norway and paid into the State Pension for a minimum of five years from the age of 16 is entitled to one, but you have to have paid in for 40 years to get the maximum. 

The retirement age for private sector workers is 67 and 62 for those who have worked in the public sector all their lives. 

4. Denmark

Denmark, which recently placed second in a ranking of the world’s happiest countries, has the fourth most generous state-backed retirement income.

With monthly payouts of £2,117.13, pensions rise in line with average earnings every year.

Although the pension age is currently 67, this is set to rise to 69 by 2035.

Unlike many other countries, the level of pension payouts isn’t linked to in-work earnings and is means-tested on retirement.

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5. Switzerland

Known for its beautiful scenery, encompassing the Alps and beautiful lakes, Switzerland is a dream retirement location for many retirees. 

Meanwhile, the State Pension is a generous £1,892.64 - around twice that paid out in Britain. 

However, unlike in the UK, workers must pay continuously into the mandatory state pension system for 44 years between the ages of 20 and 65 in order to qualify. 

How much the State Pension pays in 2024

How the UK compares

With a maximum possible income of below £1,000 a month, the UK pays out less than the countries in the top 10 of the most generous State Pension providers.  

In fact, Britain does not actually feature in Eurostat's figures as these only take into account continental European countries. 

However, its yearly increases are more generous than some other countries, thanks to the Government’s ‘triple lock’ on pensions.

This guarantees that payments will grow in line with inflation, average earnings or by 2.5%, whichever is greater.

The UK State Pension is also far more generous than those paid out by countries at the bottom of the list.

Albania pays its pensioners just £115.41 per month, Turkey pays out £206.39, while Bosnia Herzegovina only pays its pensioners £213.13 a month. 

And despite the lower pension payout compared to some European countries, retirees in the UK only need to contribute to the system for 35 years to receive a full State Pension. 

On top of this, pensioners on a low income can apply for Pension Credit, which is a means-tested benefit for those on a low income.

It guarantees a minimum weekly income of £227.10 for single people and £346.60 for couples.