European Pension Systems Face Sustainability Challenges Amid Ageing Populations
European pension sustainability is increasingly under pressure due to ageing populations and falling birthrates across the continent. Most countries use pay-as-you-go systems which shift pension costs to current workers, causing economic strains and raising concerns about intergenerational equity.
Approximately 80% of EU pensioners rely solely on state pensions for their income, with around 15% of them at risk of poverty. This situation has fueled tensions and protests, including demonstrations involving over 30,000 professionals in Madrid in September 2025.
Country-specific details highlight varying retirement ages, pension amounts, and expenditure as a percentage of GDP. In France, the retirement age is 62 with an average state pension of about €1,500 per month. Pensions represent around 13.4% of GDP, and reform attempts in 2019 and 2023 have faced setbacks, with the latest overhaul suspended until 2027.
Germany sets its retirement age at 66 and provides state pensions averaging €1,600 per month, which account for roughly 10.8% of GDP. Plans are in place to raise the retirement age to 67 starting in 2029. Pension contributions total approximately 19% of gross pay. Measures like the mother’s pension (Mütterrente) aim to support families.
In Spain, the retirement age is also 66, with state pensions around €1,512 per month constituting about 12% of GDP. The ratio of workers to retirees is projected to drop from 2.6 today to 1.6 by 2050, with roughly 15 million pensioners expected by 2048. An intergenerational equity mechanism will increase pension expenditures by 1.2% of GDP by 2029.
Denmark has a retirement age of 67, rising to 70 by 2040. The basic pension averages €965 per month with additional means-tested benefits up to €1,100. Pensions cost the country about 7% of GDP, and 36.2% of its population is aged over 65.
The Netherlands stands out with a retirement age of 67 and state pensions averaging €1,580 per month. Pensions represent around 6.4% of GDP. Despite 34.8% of the population being over 65, the country benefits from workplace pension schemes covering over 90% of employees and managing about €1.7 trillion. A recent shift in 2023 moved from defined benefit to defined contribution schemes.
These developments illustrate the challenges European countries face in sustaining pension systems while balancing economic pressures and demographic changes.
