How the UK state pension compares to the rest of Europe

With public finances under scrutiny again, campaigners are urging the Treasury to avoid any cuts to the state pension, warning that the UK already spends less on its retirees than many other advanced nations.

The full new UK state pension works out at around £997.75 per month, while in comparison, pensioners in Luxembourg receive a significantly higher average of £5,426.93 per month, according to data compiled by Almond Financial.

Campaigners warn that any move to trim pension spending in Brtiain could deepen financial insecurity among older people – particularly as many rely heavily on state support in retirement.

Dennis Reed, director of Silver Voices, said he did not understand why the UK “cannot afford to provide a decent minimum state pension in retirement” when so many developed countries can.

The i Paper looks at how the UK’s state pension stacks up against others in Europe.

Luxembourg

£4,429.18 more a month than in the UK

Pensioners in Luxembourg enjoy the most comfortable retirement in Europe, with their maximum monthly state pension five times higher than in the UK.

Luxembourg pays out a maximum of £5,426.93 per month to retirees, according to Almond Financial, ranking first on a list of 22 European countries on its index.

There are three types of pensions in Luxembourg – a public state pension, a company pension, and a personal pension.

According to a House of Commons Library report, which examines how much public expenditure is spent on the state pension system in developed countries, Luxembourg again ranks much higher than the UK, spending 7.2 per cent of GDP on old-age pensions, compared to just 4.7 per cent in the UK.

It should be noted though that these figures are from 2019, so may be slightly different today.

Norway

£841.48 more a month than in the UK

You can start drawing your pension from the month after your 67th birthday in Norway, with the maximum amount you will receive being £1,839.23, according to the data.

People accumulate pension rights by earning a pensionable income and living in Norway. For each year you have an income exceeding the average national insurance basic amount (in Norwegian), you earn pension points. And the more pension points you have, the closer to age 62 you can draw the state pension.

In terms of public expenditure on state pensions in Norway, the research shows that the country spends 1.2 per cent more than the UK – 5.9 per cent – in terms of GDP.

Switzerland

£659.25 more a month than in the UK

Switzerland pays their state pensioners a maximum amount of £1,657 per month.

The country’s system is made up of three parts: the state-run pension scheme for the elderly, orphans, and surviving spouses, the pension funds run by investment foundations, and voluntary, private investments.

Known for its expensive cost of living, Switzerland spends 5.1 per cent of GDP on state pensions.

Denmark

£488.91 more a month than in the UK

In Denmark, the maximum amount retirees can get from the state pension each month is £1,486.66. This is 49 per cent more than in the UK.

The “folkepension”, as it’s called in Danish, is paid by the government to people who have reached state pension age – which is currently between 65 and 68. How much you receive depends on a range of factors including age, marital status, work status and history, and where in the world you live or have lived.

Denmark spent 5.8 per cent of GDP on state pensions in 2019, the data revealed.

Sweden

£376.14 more a month than in the UK

The Swedish system is similar to the one in Luxembourg in that it is made up of three parts: a national public pension from the state, an occupational pension from your employer, and any savings or assets that you may have.

The national public pension is based on your total income in Sweden throughout your working life. Every year that you work and pay taxes, you earn towards your national public pension.

The Swedish Pensions Agency administers and pays out the national public pension – which according to Almond Financial is a maximum of £1,373.89 per month.

Not far off the UK, with just 0.7 per cent between them, Sweden spends 5.4 per cent of GDP on state pensions.

The UK

In the UK, once you reach state pension age – which is currently 66 but will start gradually increasing from 6 May 2026 – you can claim the full new state pension – worth £997.75 per month.

This rose by 4.1 per cent in April this year under the triple lock, which ensures the state pension rises by the highest of inflation, average wage growth, or 2.5 per cent.

To receive the full amount of the new state pension, you need to have at least 35 qualifying years of national insurance (NI) contributions. If you have fewer than 35 years, you’ll still get a portion of the state pension, but not the full amount.

Just 4.7 per cent of GDP is spend on state pensions in the UK.

Former UK shadow pensions minister Gregg McClymont pointed out that in countries such as theose mentioned above, the systems work quite differently to that of Britain.

They do not have the UK’s major workplace pension system, with their state pensions therefore required by design – and financed by general taxation – to provide bigger incomes.

He said: “There are also in the UK additional payments including pension credit and housing benefit for poorer pensioners, and second state pension entitlements critical to assessing overall income, but which do not always show up in the size of state pension comparisons.”

How more comparable pension systems work

Jonathan Cribb, of the Institute for Fiscal Studies (IFS), said that comparisons were usually most sensible to make with countries that structure their pensions system in a similar way to the UK.

Mr Cribb, head of retirement, savings, and ageing at the IFS, cited as examples “those that use a mix of state and private pensions to deliver pensions, rather than countries like France and Germany that pretty much only used state pensions”.

Australia, Canada, and the US all have systems that resemble, to some extent, the UK’s. Here’s how they work:

Australia

Politicians and pension professionals have previously pointed to Australia’s pension system, which invests heavily in infrastructure, as one that the UK should emulate.

The two already have similarities. The UK introduced auto-enrolment in 2012, roughly reflecting the system Australia imposed in 1992.

But there are significant differences between the Australian superannuation and the British pension system. The biggest is that in Australia contributions come largely from the employer, and they are compulsory.

Canada

Both employers and employees contribute to the Canada Pension Plan (CPP), which is based on a percentage of the employee’s earnings up to a certain limit known as the earnings ceiling, or the year’s maximum pensionable earnings.

Self-employed individuals must pay both the employer and employee portions.

These CPP contributions are then used to fund different benefits that help Canadians during retirement or if they experience a disability.

USA

Unlike the UK, which has a single state pension system that applies to all, there is no single US programme in America. Instead, adults of retirement age, as well as individuals with disabilities, rely on social security payments.