Pension breakeven index: How does the UK state pension compare to the rest of Europe?

Retirement planning is a vital part of life, not only in later life but even those in their 20s should think about putting some pounds in the bank for later life. However, it can be an overwhelming experience.Most of us will have begun paying into our pension as soon as we turn 22, without giving it a second thought. However, if you aren’t sure where to start, get in touch with a pension advisor to discuss your options.

For those approaching retirement age in the UK, most will benefit from a state pension, which we, our employers and the government will have contributed to over the course of our working life.But thanks to the rising cost of living, pensions are being stretched in the UK as well as right across Europe and soon-to-be retirees are all seeking the same pension advice, such as ‘is my pension enough’ and ‘how comfortable will life be after work?’

To find out how the UK compares to other countries, we looked at the pension systems in all of Europe’s 50 countries to establish which country offers the most to retirees in comparison to the country’s current cost of living data. We looked at Numbeo data that analyses the average cost of general living expenses like food shopping, the price of a meal at a restaurant, energy bills etc. and gives an estimated cost of living per month, excluding rent.

The data has been calculated on the basis that the majority of pensioners in these countries are mortgage-free. Almond Financial then ranked the top 30 countries in a Pension Breakeven Index from the most pension-friendly to the least.

Where in Europe offers the most to residents in terms of pension provision?

Spain tops the European Pension Breakeven Index. The Spanish pension system pays out a maximum of €2,617.53 per month (£2,287.24) and coupled with the country’s low cost of living, pensioners can expect a comfortable retirement in the sun with pension income at 407.40% over the breakeven point. Belgium came in second place, with the country’s pension system paying out a maximum of €3,100 per month for those who have worked for 45 years. Although not particularly low, the monthly cost of living for a single person in Belgium (excluding rent) is €822.17 (£720.45) but thanks to the generous pension, retirees are still likely to feel comfortable.

The UK ranked around the halfway mark in the top 30 at number 16, just above the breakeven point for pension income. At just 16.61% above the breakeven point, the UK pays just £114.28 more in state pension than the average cost of living for a pensioner, but as the cost of living crisis rages on, the monthly costs are expected to rise significantly over the coming months. The maximum UK state pension pays a total of £802.32 per month to retirees and at the time of writing, recent data stated that the monthly cost of living for a single person (excluding rent) is £688.04.

RankCountryPension paid out per month in £Cost of Living Monthly Costs in £% above/below the pension income breakeven point
4Bosnia and Herzegovina£979.72£411.20238.26%
16United Kingdom£802.32£688.04116.61%
28Czech Republic£167.54£564.3429.69%

At the other end of the table, Armenia ranked bottom of the Pension Breakeven Index. The Armenian state pension system pays the equivalent of £67.79 to those eligible, despite average monthly living costs of £506.81. Appearing second last in the index is Georgia with a monthly pension payment of £82.34 per month for retirees, despite average living costs of over £477.

Commenting on the results of the research, Principal Financial Adviser at Almond Financial, Sam Robinson, commented:

“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.”

“Closer to home, the UK has a system that is just above the breakeven point which means at present, there isn’t much room to manoeuvre for those battling the cost of living crisis. And while it is positive that the UK finds itself among the top half of countries,  for how much longer is the question.”

“While the increase in state pension in line with inflation is needed and welcomed, it’s clear that those over 66 need to look at other options rather than just relying on the state pension.”

“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.”

Which areas of the UK have the most people eligible for a pension?

The state pension age in the UK is 66, meaning that those who reach that age are eligible for a state pension. Below are the top ten areas of the UK with the most people currently eligible for a state pension.

Location% pop over 66

Five ways to maximise your retirement benefits:

  1. Use pay rises to increase pension contributions and pay more into a pension when loans and other commitments end.
  2. Maximise employer contributions.
  3. Ensure your investment approach is efficient and suitable to your financial situation.
  4. Maximise tax relief available.
  5. 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.

Need Pension Advice and not sure where to start?

Our team of financial and pension advisors can help guide you through the process of investing in life after work. Book a call using the link below.


Almond Financial collected state pension data from all 50 European countries, including state pension age, the monthly entitlement available and life expectancy.

In addition, Almond Financial then took cost of living data from Numbeo, and the state pension data to calculate the percentage above or below the pension income breakeven point and ranked the top 30 countries from the most pension-friendly countries to the least.