In European countries, pensions are calculated according to different principles: in Germany, the system is based on pension points; in Spain, on years of service and salary; and in the Netherlands, private savings play a significant role. Due to an aging population and pension fund deficits, many EU countries are continuing reforms in 2026 and gradually raising the retirement age. Learn more about how pension systems work and where in Europe the most favorable conditions for retirees are found

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For several years now, European countries have been revising their pension calculation rules due to the rapid aging of their populations. According to Eurostat, people over the age of 65 account for more than 21% of the EU’s population, and this figure continues to rise. That is why governments are raising the retirement age, increasing the required length of service, and encouraging citizens to save for their retirement on their own.

At the same time, there is no single pension system in Europe. In Germany, future pensions depend on special points that a person accumulates throughout their career. In Spain, years of official employment and salary level play a key role. The Netherlands relies on strong pension funds and private savings, while Italy is gradually shifting to a stricter model due to the government’s high spending on social benefits.

For foreigners working in the EU, these rules are also of great importance. In many countries, you can count work experience gained in other European Union countries, and sometimes even claim multiple pensions at the same time. However, the conditions, benefit amounts, and application procedures vary significantly depending on the country of residence and the number of years of official employment.

In our previous article, we talked about the top 10 countries for retirement and comfortable living abroad.

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How does the pension system work in Germany?

Germany has one of the most complex yet stable pension systems in Europe. The foundation of the state pension here is a system of so-called pension points—Entgeltpunkte. The higher a person’s official salary and the longer their work history, the larger their future pension will be.

According to Deutsche Rentenversicherung, over 21 million people will receive a state pension in Germany by 2026. However, the average pension amount varies significantly depending on region, gender, career length, and lifetime income.

What are pension points (Entgeltpunkte)?

In Germany, pensions are calculated not based on a fixed amount, but on the number of accumulated pension points. A person earns these points each year depending on how their salary compares to the national average income.

If an employee earns the average German salary, they earn 1 pension point per year. If the salary is higher, the number of points increases; if lower, it decreases.

For example:

- Average salary = 1 point;

- Salary twice the average = about 2 points;

- Half the average salary = 0.5 points.

Upon retirement, all accumulated points are multiplied by the value of a single pension point. In 2026, this figure in Germany exceeds 40 euros per point and is regularly adjusted for inflation and changes in wages.

What is the required contribution period for a pension in Germany?

The minimum insurance period to qualify for a state pension in Germany is 5 years of formal employment with contributions to the pension fund. However, this is not sufficient for a full pension.

To receive standard payments without reductions, you typically need to:

- Have at least 35 years of insurance coverage;

- Reach the official retirement age;

- Pay contributions to the social insurance system regularly.

The retirement age in Germany is gradually being raised to 67. This is one of the key reforms due to the aging population and a shortage of workers in the labor market. According to forecasts by the Federal Statistical Office of Germany (Destatis), by 2035 nearly one-third of the country’s population will be over 67 years old.

Early retirement is possible, but the benefit amount is reduced. In some cases, the pension may be reduced by approximately 0.3% for each month of early retirement.

How much will retirees receive in Germany in 2026?

Pension amounts in Germany vary widely. The average state pension after a full career is approximately:

- €1,500–€1,800 per month for men;

- €900–1,300 for women due to frequent career breaks and part-time employment.

Many Germans also take advantage of:

- Corporate pension plans;

- Private savings funds;

- Investment pension accounts.

That is why the actual income of many retirees in Germany is significantly higher than the basic state pension. At the same time, due to high housing and utility costs, even German retirees are increasingly facing the risk of poverty, especially in large cities.

In our previous article, we discussed the Top 25 Best Countries to Retire in 2026.

How is the pension calculated in Spain?

The Spanish pension system is considered one of the most generous in Southern Europe; however, in recent years, the country has been actively reforming the rules due to budget deficits and an aging population. Spain is among the EU countries with the highest life expectancy, so the burden on the pension system is constantly growing.

Unlike Germany, which uses a points-based system, in Spain the main factors are years of service, official salary, and the amount of social security contributions a person has paid throughout their career.

What determines the size of a pension in Spain?

The size of a pension in Spain is directly linked to an employee’s salary and the number of years of official employment. To calculate the pension, the government takes into account a person’s average income over the last few years before retirement.

In 2026, the system will gradually transition to a model where approximately 25 years of earned income are taken into account for calculating benefits. The longer a person has worked officially and the higher their salary was, the larger the pension will be.

Key factors:

- Number of years of insurance coverage;

- Level of official salary;

- Regularity of contributions to the social insurance system;

- Retirement age.

To receive a full pension, more than 36 years of official work history are usually required. If the work history is shorter, payments may be significantly lower.

What is the retirement age in Spain?

Spain is also gradually raising the retirement age. In 2026, the standard retirement age is:

- 66 years and a few months for most workers;

- 65 years for people with very long service.

The country is raising the retirement age in stages, and by the end of the decade it will approach 67 years. This is due to the growing number of retirees and a shortage of funds in the state pension fund.

According to the Spanish Social Security Administration, more than 20% of Spain’s population is already over 65, and by 2050, this figure could become one of the highest in Europe.

Average pension in Spain in 2026

The average state pension in Spain remains one of the highest in Southern Europe. In 2026, average payments will be approximately:

- €1,400–€1,600 per month for retirees with a full career;

- over €3,000 – the maximum state pension;

- less than €1,000 – for people with short work histories or low wages.

The Spanish government regularly adjusts pensions for inflation. In some years, increases have exceeded 8% to offset sharp rises in food, rent, and electricity prices.

At the same time, economists warn that maintaining such a generous system is becoming increasingly difficult. That is why Spain is actively encouraging citizens to stay in the labor market longer and make use of private pension savings.

Previously, we discussed pension amounts in Europe in 2026 and the countries where it is most advantageous for retirees to live.

The Dutch Pension System

The Netherlands regularly ranks among the countries with the best pension systems in the world. The Dutch model has remained one of the most stable for many years thanks to a combination of state pensions, corporate programs, and private savings.

The main feature of the system is that most workers in the country automatically participate in occupational pension funds through their employer. This is why retirees in the Netherlands often receive significantly higher benefits than in many other European countries.

How does the AOW state pension work?

The basic state pension in the Netherlands is called the AOW (Algemene Ouderdomswet). It is funded through taxes and paid to everyone who has lived or worked in the country.

Unlike in many other countries, the amount of the AOW does not depend directly on a person’s salary. The main factor is the number of years lived in the Netherlands before reaching retirement age.

The system works as follows:

- For each year lived in the country, a person accumulates 2% of their future pension;

- To receive a full state pension, one must have lived in the country for 50 years;

- If a person has lived in the Netherlands for fewer years, the payments are reduced proportionally.

In 2026, the full basic AOW pension for a single person will exceed 1,500 euros per month, excluding additional pension programs.

Why are private pension funds so important?

It is corporate and private pension funds that make the Dutch system one of the most efficient in the world. Most employees automatically contribute to occupational funds through their employer.

As a result, upon retirement, a person often receives several sources of income at once:

- The AOW state pension;

- A corporate pension;

- Personal savings or investments.

According to the Dutch Central Bank, Dutch pension funds manage trillions of euros in assets and are among the largest institutional investors in the world.

As a result, the average income of retirees in the country remains relatively high even after the end of their careers.

Retirement Age and Average Benefits in the Netherlands

The Netherlands, like other European countries, is gradually raising the retirement age due to increased life expectancy. By 2026, the official retirement age in the country will exceed 67 years and may vary depending on the demographic situation.

The average total pension income in the Netherlands often exceeds:

- €2,000–2,500 per month for people with a full career;

- Significantly more for employees with high corporate pensions.

At the same time, the system has its drawbacks. Due to the difficult economic situation and fluctuations in financial markets, some pension funds have reduced the indexation of benefits in recent years. In addition, young workers are increasingly complaining about high contributions and the risk of a future pension fund deficit.

In the previous article, we provided information on the most expensive cities in the world to live in in 2026 according to Numbeo.

How does the pension system work in Italy?

Italy has one of the most expensive pension systems in Europe. The country spends over 15% of its GDP on pensions—one of the highest rates among EU member states. Due to an aging population and low birth rates, the government has been implementing pension reforms for many years and gradually tightening retirement rules.

The system in Italy is based on employees’ social security contributions. The longer a person has worked officially and the more contributions they have paid, the higher their benefits will be after retirement.

Why is Italy constantly raising the retirement age?

Italy is among the “oldest” countries in Europe. Nearly a quarter of the country’s population is already over 65 years old. Because of this, the government is forced to regularly change pension rules to reduce the burden on the budget.

In 2026, the standard retirement age in Italy is approximately:

- 67 years for most workers;

- A lower age is possible only with very long service or under special conditions.

In addition, the country is gradually encouraging people to stay in the labor market longer. Early retirement is possible, but it often comes with lower benefits or strict requirements regarding years of service.

How do work history and contributions affect the pension?

The current Italian system depends largely on the amount of contributions a person has paid throughout their life. The pension is directly linked to:

- Official salary;

- Number of years worked;

- Amount of contributions to the social security fund;

- Retirement age.

To receive a full pension, more than 20 years of insurance coverage is usually required, although Italians often work much longer to ensure comfortable payments.

Italy also has occupational and private pension funds, though they are less common than in the Netherlands or Germany. That is why most citizens rely primarily on the state system.

What pensions will Italians receive in 2026?

The average pension amount in Italy depends on the region, profession, and length of career. According to INPS data, in 2026, average payments will be:

- Approximately 1,300–1,700 euros per month for people with full insurance coverage;

- Significantly less for workers with career breaks or low incomes;

- Over 2,000 euros for certain categories of former civil servants and high-earning professionals.

At the same time, Italy faces a significant generational gap. Young workers are increasingly facing unstable employment and short-term contracts, putting them at risk of receiving significantly lower pensions in the future.

Experts also warn that without further reforms, the burden on the Italian pension system will only grow, especially given the low birth rate and the shrinking working-age population.

Earlier, we talked about the top 10 countries for a comfortable retirement with a budget of up to $3,000 per month.

How are pensions calculated in France?

France has one of the largest and most expensive pension systems in Europe. The state spends enormous sums on social benefits every year, and the pension issue has remained one of the most contentious topics in French politics for many years. Attempts to reform the system regularly trigger large-scale strikes and protests across the country.

The French model combines a state pension, occupational schemes, and supplementary savings. At the same time, the calculation rules remain quite complex, as historically there have been dozens of separate pension schemes in France for different professions.

Why did pension reform in France spark protests?

One of the main reasons for the protests is the increase in the retirement age. Between 2023 and 2025, the French government implemented a major reform that gradually raises the official retirement age from 62 to 64.

The government cites several reasons for this:

- France’s population is aging;

- The number of retirees is growing rapidly;

- It is becoming increasingly difficult for the state to finance the system;

- People are living longer and receiving pensions for longer periods.

According to the French National Institute of Statistics and Economic Studies (INSEE), life expectancy in France exceeds 82 years—one of the highest rates in Europe.

Despite the reforms, the French remain among the most vocal opponents of raising the retirement age in the EU. Strikes in the country have repeatedly brought public transportation to a standstill, caused flight cancellations, and led to the closure of government offices.

How is the French pension calculated?

The French pension depends on:

- The number of years of official employment;

- Salary level;

- Amount of social security contributions;

- The employee’s profession;

- Supplementary pension schemes.

For most workers, the basic pension is calculated based on the average salary during the best years of their career. A full pension is typically available to those with sufficient insurance coverage—over 40 years.

In addition to the state system, supplementary occupational pension schemes play a very important role in France, particularly for private-sector employees and civil servants.

Certain professions have special preferential schemes:

- For transportation workers;

- Military personnel;

- Police officers;

- Certain categories of civil servants.

It is precisely because of these special conditions that the French system is often called one of the most complex in Europe.

What will pensions be like in France in 2026?

France remains among the EU countries with relatively high pension payments. In 2026, the average pension in the country is approximately:

- €1,400–€1,800 per month for most retirees;

- Significantly higher for people with high salaries and supplementary pension plans;

- Lower for workers with short service or career breaks.

French retirees also have access to a comprehensive social support system, including health insurance and various benefits. At the same time, due to inflation and the rising cost of living, even in France, an increasing number of older people are reporting financial difficulties, especially in major cities.

Are European pensions sufficient for a comfortable life?

Even in wealthy European countries, retirees are increasingly facing financial difficulties due to inflation and the rising cost of living. This is particularly true in major cities, where housing and medical services are very expensive.

The risk of poverty among people over 65 in the EU remains high, especially for:

- Women;

- People with incomplete work histories;

- Migrants;

- Low-wage workers.

That is why private savings plans and investments are becoming increasingly popular in most European countries, helping to provide additional income after retirement.

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