Older individuals had decrease common disposable incomes than the whole inhabitants in 28 European nations in 2022, based on the OECD. Luxembourg was the one exception among the many 29 nations included within the evaluation.
Pensioners face monetary difficulties in lots of nations and a few individuals aged 65 and over proceed to work consequently. However how precisely do the earnings sources of older individuals differ throughout nations?
Based on OECD knowledge, two-thirds (66%) of the earnings of individuals aged 65 and over in Europe comes from public payouts, that are primarily state pensions and advantages. That is on common throughout 27 nations in 2020 or the most recent obtainable 12 months.
Work is the most important earnings supply after public transfers, accounting for 21% of disposable earnings for older residents. Capital earnings, reminiscent of private pensions and financial savings, follows at 7%, and personal occupational pensions at 6%.
The share of public payouts in incomes ranges from 41% in Switzerland to 86% in Belgium.
Public transfers additionally account for at the very least three-quarters of earnings for older individuals in Luxembourg (83%), Austria (82%), Finland (80%), Czechia (76%), Italy (76%), and Portugal and Greece (each 75%).
Moreover Switzerland, this share is under 50% within the UK (42%), the Netherlands (43%), and Denmark (45%).
Amongst Europe’s 5 largest economies, France has the best share of public transfers in older individuals’s incomes at 78%, whereas the UK has the bottom at 42%. The share is 76% in Italy, 72% in Spain, and 68% in Germany.
Apart from Finland, the Nordic nations have decrease shares of public transfers. The share is 52% in Sweden, and 58% in each Norway and Iceland.
In Turkey, an EU candidate nation, 57% of older individuals’s earnings comes from public transfers.
Non-public occupational transfers exist solely in 7 nations
Non-public occupational pensions (pensions, severance funds, loss of life grants, and so forth.) will not be widespread throughout Europe.
Amongst 27 nations, solely seven notice them as a supply of earnings for older individuals. The Netherlands has the best share, the place they account for 40% of earnings, adopted by the UK at 33% and Switzerland at 29%.
Three Nordic nations additionally embrace non-public occupational pensions. They make up 19% of earnings in Sweden, 15% in Denmark, and 14% in Norway.
Germany is the final nation on this group, with non-public occupational pensions accounting for simply 5% of earnings.
How does the share of capitals differ?
The portion of earnings that comes from capital — primarily non-public pensions and private financial savings — varies considerably throughout Europe, starting from lower than 1% in Slovakia to as a lot as 23% in Denmark. In a number of nations, this share is at the very least 10%. These embrace Turkey and Switzerland (each 16%), France (15%), Sweden (12%), the UK (11%), and Finland, Norway, and Iceland (every at 10%).
The share of capital in older individuals’s earnings is lower than 5% in a number of nations.
Work stays a key earnings supply for older individuals
The share of labor within the earnings of older individuals is critical in lots of European nations, exceeding one-third in a number of. It ranges from 7% in France to 40% in Latvia.
Work accounts for over 32% of earnings for older individuals in Slovakia (36%), Lithuania (35%), Estonia and Poland (each 34%), and Iceland (32%).
Work nonetheless makes up at the very least one-fifth of older individuals’s earnings in a number of nations, together with Turkey (27%), Hungary (26%), Slovenia (23%), Eire and Czechia (22% every), and Greece, Portugal (21% every), and Spain (20%).
Older individuals in France, Luxembourg, Finland, and Belgium are among the many least reliant on work, with employment earnings accounting for lower than 11% of their whole earnings.
Key findings: Various social safety programs
Various ranges of the 4 earnings sources for older individuals, most of whom are pensioners, present the variety of social safety programs throughout Europe. Key insights from the information embrace:
- Western Europe (reminiscent of Belgium, France, Austria) depends closely on public pensions as the first earnings supply.
- Nordic nations (reminiscent of Denmark and Sweden, not Finland) have extra diversified earnings sources, together with robust non-public pension schemes.
- Japanese and Southern Europe (together with Poland, Slovakia, Greece, and Turkey) are inclined to have increased shares of work-related earnings.
- Non-public occupational pensions stay underdeveloped in lots of Japanese and Southern European nations.
Outdated age poverty stays a major concern in a number of European nations, and main pension disparities live on throughout the continent. As life expectations improve, policymakers face rising challenges to make sure enough assist for ageing populations whereas maintaining deficits at economically sustainable ranges.