The OECD has reported that older adults in 2022 had a lower average population compared to the overall population across 28 European nations. Luxembourg stood out as the sole exception among the 29 countries analyzed.
Many pensioners are grappling with financial challenges, prompting some individuals over 65 to remain in the workforce. But, it raises a question: how does the income source for older adults differ by country?
Data from the OECD shows that about two-thirds of the income for seniors over 65 in Europe—66%—comes mainly from public payments, which include state pensions and benefits. This figure is an average from 27 countries based on the latest available years, specifically 2020.
Employment serves as the largest income source for older adults after public payments, accounting for 21% of their disposable income. Capital income, which consists of personal pensions and savings, contributes 7%, while private occupational pensions make up 6%.
The proportion of income derived from public payments varies significantly, from 41% in Switzerland to 86% in Belgium.
In Luxembourg, Austria, Finland, Czech Republic, Italy, and Portugal, as well as Greece, public payments comprise at least three-quarters of seniors’ income, with percentages reaching 83% in Luxembourg alone. Conversely, the UK, Netherlands, and Denmark have less than 50% from public sources, at 42%, 43%, and 45%, respectively.
Among Europe’s five largest economies, France has 78% of older adults’ income coming from public transfers, while the UK is the lowest at 42%. Italy shows 76%, Spain 72%, and Germany 68%.
Scandinavian countries, with the exception of Finland, tend to rely less on public transfers, with Sweden at 52% and both Norway and Iceland at 58%.
In Türkiye, which is a candidate for EU membership, 57% of seniors’ income stems from public sources.
Private occupational pensions only in seven nations
Private occupational pensions, which include various retirement benefits, are not widespread in Europe.
Out of 27 countries, only seven recognize them as a source of income for seniors. The Netherlands leads with 40%, followed by the UK at 33% and Switzerland at 29%.
The three Nordic nations also incorporate private occupational pensions, accounting for 19% in Sweden, 15% in Denmark, and 14% in Norway.
Germany ranks lowest in this area, where private occupational pensions constitute merely 5% of income.
Capital income reveals significant differences
Income from capital sources, primarily private pensions and personal savings, shows considerable variation across Europe, ranging from under 1% in Slovakia to 23% in Denmark. In several countries, this portion is at least 10%. Turkey and Switzerland both sit at 16%, France at 15%, and the UK at 11%, with Finland, Norway, and Iceland at 10%.
Conversely, some countries report capital income as less than 5% of seniors’ overall income.
Work continues to be a crucial income source
Employment remains a significant income source for seniors in many European countries, with some reporting over a third of their income from jobs. This ranges from 7% in France to 40% in Latvia.
Seniors in Slovakia see jobs accounting for 36% of their income, followed by Lithuania at 35%, and both Estonia and Poland at 34%. Iceland similarly reaches 32%.
Countries like Turkey (27%), Hungary (26%), Slovenia (23%), Ireland, and the Czech Republic (22%), along with Greece and Portugal (21%), and Spain (20%), report that at least one-fifth of their income comes from employment.
In contrast, older individuals in France, Luxembourg, Finland, and Belgium are most reliant on jobs for less than 11% of their income.
Key takeaways: Diverse social security systems
The disparities among the four income sources for senior pensioners highlight the varied social security systems across Europe. Noteworthy points include:
- Western European nations, like Belgium, France, and Austria, heavily depend on public pensions as their primary income source.
- Scandinavian nations, such as Denmark and Sweden (excluding Finland), feature a more diverse income landscape, including robust private pension systems.
- Eastern and Southern European countries, including Poland, Slovakia, Greece, and Türkiye, generally have a larger share of income tied to labor.
- Private occupational pensions remain largely underdeveloped in many Eastern and Southern European nations.
Poverty among the elderly continues to be a pressing issue in several European countries, where significant disparities in pensions persist. With increasing life expectancy, policymakers face mounting challenges in providing adequate support for aging populations while keeping economic deficits manageable.
