The UK State Pension is worth up to £230.25 each week during the 2025/26 financial year.
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New research has found people on the UK State Pension are being left behind in the ongoing cost of living crisis as pensioners barely break even, despite an increase in entitlement. The research, conducted by pension advisors Almond Financial, looked at the current State Pension in comparison to the average cost of living in the UK.
Almond Financial then looked at similar data in European countries to establish which country offers the most to retirees in comparison to the country’s current cost of living data.
It then analysed the average cost of general living expenses such as food shopping, the price of a meal at a restaurant and energy bills to discover an estimated cost of living per month, excluding rent.
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The UK moved up four places from last year’s report in the top 30, now coming in at number 11, continuing to linger just above the breakeven point for pension income.
Following changes to the new UK state pension system, British pensioners are better off than they were in 2024, seeing the State Pension vs average cost of living increase slightly, by 3 per cent.
However, this is still just 21.5 per cent above the breakeven point, the UK state pension pays £177 more than the average cost of living.
The maximum UK State Pension will pay a total of £997.75 per month to retirees during the 2025/26 financial year and the new data indicates the monthly cost of living for a single person (excluding rent) is £820.90.
It’s important to be aware the State Pension can be paid weekly, fortnightly or every four weeks in the UK.
The full New State Pension is now worth £230.25 each week, or £921 every pay period, while someone on the full Basic State Pension receives £176.45 per week, some £705.80 each pay period.
Topping the European Pension Breakeven Index is Luxembourg.
The Luxembourg pension system pays out an average of £5,426, the equivalent to a whopping £4,429 more than the UK State Pension. With a similar cost of living, at least for the meantime, pensioners in Luxembourg can enjoy a comfortable retirement.
Rounding out the rest of the top five are Spain, Norway, Belgium. Sweden and Denmark.
Top 10 European countries paying highest State Pension per month
Luxembourg
£5,426
Norway
£1,839
Switzerland
£1,657
Denmark
£1,486
Sweden
£1,373
Belgium
£1,338
Netherlands
£1,332
France
£1,254
Spain
£1,238
Ireland
£1,047
A full breakdown of the monthly cost of living outgoings can be found on the Almond Financial website here.
Commenting on the latest figures, principal financial adviser at Almond Financial, Sam Robinson, said: “The data is an interesting insight into just how well people can live when they retire right across Europe.
“For those approaching state pension age in Spain, retirement is a particularly enticing prospect with a healthy pension, low cost of living and not to mention the fantastic weather.
“This year’s increase to the UK state pension has had a meaningful impact on pension income versus the cost of living, meaning pensions could feel slightly better off. Despite this, the UK state pension still rests just above the breakeven point, and remains weak compared to other pension systems across Europe.
“Planning for life after work is crucial, and it’s important to seek advice from a pension advisor if you aren’t sure where to start.”
Five ways to maximise your retirement income
- Use pay rises to increase pension contributions and pay more into pension when loans and other commitments end
- Maximise employer contributions
- Ensure your investment approach is efficient and suitable to your financial situation
- Maximise tax relief available
- Avoid taking large lump sums of money from the pension when there isn’t a need – taking the first 25% of your pension will be tax-free cash although any future withdrawals will be taxable.
You can view the full report online here.
