How our State Pension compares to other major countries

Just how generous is our State Pension?

The UK has come firmly at the bottom of a list charting how generous G7 countries’ state pensions are.

According to the research from Fidelity International, the UK State Pension only provides British pensioners with an equivalent of 22% of what they were earning on average before retirement.

In contrast, respectively, the French and Italian state pensions are worth an average of 58% and 76% of average income before retirement, the data found.

“These gaps reflect very different approaches to retirement provision,” said Marianna Hunt, personal finance specialist at the investment provider.

“In the UK, the state pension acts as a foundation or top-up, while in France and Italy it represents the mainstay of retirement income.

“That means, in the UK, it is critical for individuals to save into private and workplace pensions to secure their financial future.”

How the pensions compare

So just how much do pensioners abroad receive in comparison?

According to the Parliamentary briefing ‘Pensions: International Comparisons’ from October 2024, the UK “devotes a smaller percentage of its GDP to state pensions and pensioner benefits than most other advanced economies.”

Indeed, the comparison revealed that the UK provides a lower level of pension than most other advanced economies compared to average earnings.

The UK has an overall net replacement rate of 54.4% from mandatory pensions for an average earner (what percentage of pre-retirement earnings the state pension matches), which is below the OECD (Organisation for Economic Co-operation and Development) average of 61.4%.

In fact, the OECD estimated that 14.5% of people aged 66 and over in the UK were living in relative income poverty in 2022. This was the 14th highest rate among 34 OECD countries for which data was available for 2019-2022.

Which European countries pay the most?

Iceland’s state pension is one of the most generous in Europe, with pensioners receiving £30,251 a year from the age of 67 – double the average EU state pension of £13,580 and nearly three times the UK State Pension - while retirees in Luxembourg receive £26,778 a year and those in Norway £25,972.

Indeed, the Nordic countries are typically more generous than other European countries, with Denmark also paying pensioners £25,410 a year.

However, as the Parliamentary briefing points out, “the relative position of pensioners converges” if we also take into account income from other sources.

In the UK, income from occupational and personal pensions is more important than it is in certain other countries, such as France, where there is universal state provision, financed either through taxation or national insurance contributions.

What’s more, while Iceland’s pension is the highest in monetary terms, it actually only replaces pensioners’ pre-retirement income by 52.1%, compared to 54.4% in the UK, 62.4% in Luxembourg and 77.3%.

This may be because average salaries in Iceland tend to be higher than those in the UK and elsewhere in Europe.

The OECD also points out that pensions are the main source of income for retirees in Europe. In most European countries, state pensions and benefits provide more than 70% of older adults’ total household income, and in some, more than 80%.

Country	How much?	Age	Contributions	% of pre-retirement income
Iceland	€35,959 (£30,251)	67 (can apply from 65)	Full pension if you resident for 40 years between 16 and 67	52.1%
Luxembourg	€31,835 (£26,778)	65 – but from 57 if enough contributions	40 years of contributions	62.4%
Norway	€30,879 (£25,972)	67 – 62 if you have enough contributions but will be lower	Based on income and residence	54.8%
Denmark	€30,211 (£25,410)	67, but rising to 68 in 2030, 69 in 2035 and 70 in 2040	Universal, based on 40 years residence between 15 and 65	77.3%
Switzerland	€27,010 (£22,719)	65 (previously 64 for women)	Full pension if full contributions from age 21 to 65	45.3%
Austria	€24,349 (£20,480)	60 for women (increasing to 65) and 65 for men	Minimum 15 years of contributions through employment	33.7%
Netherlands	€24,092 (£20,264)	67	Accrue 2% of the pension for every year spent in Holland. Full pension for 50 years’ residence	93.2%
Belgium	€22,577 (£19,000)	66	Contributions through work. 45 years for full pension	60.9%
Sweden	€22,436 (£18,882)	67	40 years, minimum 3 years	65.3%
Ireland	€21,766 (£18,318)	66	520 and 2080, or more, reckonable contributions (of which 520 must be full-rate social insurance contributions)	36.1%
EU 27 average	€16,138 (£13,580)	Varies	Varies	76.2%
UK	€14,227 (£11,973)	66 but set to increase to 67 and 68	At least 10 years of contributions and 35 years for maximum	54.4%

Source: OECD/LV

As the Parliamentary briefing explains, comparing the UK’s system to other countries’ can be difficult because they are all different, but there are essentially three different models.

In the earnings-related model of state pension provision (used in France, Germany, Sweden and Italy), pensions are based on the earnings on which the retiree paid social insurance contributions.

In these systems, the schemes have a ceiling above which further contributions cannot be made and a base level to protect those on low incomes, although in Sweden there is no ceiling.

Australia’s state pension is means-tested – the state guarantees a minimum but weighs up the pensioner’s additional income and assets.

Lastly, the flat-rate system (as in the UK, Ireland and the Netherlands), where claimants receive a flat-rate state pension, dependent on their contribution record and/or history of residence.

In addition, Pension Credit provides a means-tested top-up to the UK State Pension for those who qualify.