Europe's Pension Systems Face Sustainability Challenges Amid Aging Populations and Public Concern
Europe's pension systems are under increasing pressure due to aging populations, falling birthrates, and economic factors that threaten the sustainability of pay-as-you-go schemes.
In France, the retirement age is 62 with an average state pension of about €1,500 per month, accounting for approximately 13.4% of GDP. The country has attempted pension reforms in 2019 and 2023, though the overhaul planned for 2023 has been suspended until 2027.
Germany's retirement age is currently 66, with a state pension averaging €1,600 per month and pension spending about 10.8% of GDP. Approximately 19% of gross pay contributes to the pension fund. The worker-to-retiree ratio stands at 2:1 but is expected to decline, leading to a planned rise of the retirement age to 67 by 2029. Measures such as the Mütterrente have been introduced, but projections indicate the pension replacement rate may fall to 47% by 2031.
In Spain, the retirement age is 66, with an average pension of about €1,512 per month, representing roughly 12% of GDP. Current worker-to-retiree ratios are 2.6 but expected to fall to around 1.6 by 2050. A gradual raise of the retirement age to 67 is planned between 2011 and 2027. Additional mechanisms like the solidarity tax and an intergenerational equity mechanism are set to increase to 1.2% by 2029. Protests in Madrid in October reflect public concern over these changes, with about 15 million people expected to be pensioners in the future.
A six-country YouGov poll conducted across Italy, France, Germany, Spain, Poland, and the UK reveals widespread public concern regarding pension affordability. Currently, a majority in Italy, France, Germany, and Spain consider their state pensions unaffordable (ranging from 52% to 61%), with Poland at 45% and the UK at 32%.
Looking ahead, between 49% and 66% across all surveyed countries believe pension systems will be unaffordable by the time people currently in their 30s and 40s retire. Pensioners in the UK generally find the state pension affordable (62%), but only 27% of non-retired respondents agree.
Regarding generosity, between 53% and 83% of respondents feel pension amounts are too low, with pensioners expressing even greater dissatisfaction (72%–88%). Confidence in a comfortable retirement among workers is low, ranging from 57% in Germany and the UK to 72% in Italy.
Reform proposals face significant public resistance; there is net opposition to raising the pension age, increasing taxes on working-age people, mandating children to support retirees, and reducing pension payments. For example, opposition to raising retirement age ranges from 47% in France to 65% in Germany, and opposition to reducing pensions is 81% in Germany and 61% in Italy.
These findings illustrate the complex challenges confronting Europe's pension systems and the social contract underlying them, as demographic shifts collide with economic pressures and public skepticism about reform options.
