Across Europe, pension systems are facing increasing strain from aging populations, creating a widening gap between wealthier northern nations and their southern and eastern counterparts. While some pensioners enjoy comfortable retirements, many in countries like Croatia are struggling to make ends meet.
European Pension Disparities
According to recent Eurostat data analyzed by Euronews, pensions are a pressing macroeconomic challenge for the European Union. Long-standing differences between national pension systems are becoming increasingly difficult to ignore as people live longer and public finances face growing pressure.
In 2023, Iceland offered the highest average annual gross old-age pension at €38,031. Luxembourg, Denmark, and Norway followed closely behind. Conversely, Turkey recorded the lowest figure at just €3,377 per year, with Bulgaria and Romania also near the bottom.
The EU average pension stands at €17,321 annually, or approximately €1,443 per month before tax. However, this figure obscures significant inequality, with the highest pensions being almost ten times larger than the lowest.
Purchasing Power and Cost of Living
Nominal pension amounts don’t fully reflect the reality for pensioners. Cost of living, particularly food prices, must also be considered. Switzerland is the most expensive country for food, with an index of 160 (EU average = 100), while Iceland and Norway also have high costs.
Adjusting pensions for cost of living using purchasing power standards (PPS) narrows the gap between countries. Spain, for example, ranks fourth in purchasing power despite being 13th in nominal pension amounts due to its lower living costs.
Scandinavian countries and those in the Benelux region have maintained higher pensions through strong public schemes and private funds. Croatia, however, falls into the latter group, ranking 28th out of 35 countries analyzed.
Croatia’s Pension Challenges
The average annual pension in Croatia is just €5,570, similar to Romania, Lithuania, and Slovakia. Despite these low pensions, food prices in Croatia are almost at the EU average, with an index of 100.7. This means Croatian pensioners pay similar prices for food as those in wealthier countries, while receiving pensions roughly three times lower than the EU average.
Experts warn that pension systems relying on intergenerational solidarity are facing a mathematical challenge. In the 1950s, seven workers supported one pensioner. Today, the EU average is roughly three workers per pensioner, and it’s expected to fall to two by 2050.
Italy and Greece already spend more than 16 percent of their GDP on pensions, limiting investment in other areas. For Croatia, reform and a broader strategy to address both pension adequacy and living costs are crucial to avoid widening the gap between retirement expectations and reality.
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