The full new state pension in the United Kingdom is £241.30 per week in the 2026/2027 financial year, or £12,547.60 per year. Usually, 35 qualifying years of National Insurance contributions are required to receive the full amount. However, the UK state pension remains lower than public payments in a number of European countries when compared with pre-retirement income.
According to the latest comparison by the Organisation for Economic Co-operation and Development, the gross replacement rate in the United Kingdom is 44.7% for a person with average earnings and a full career. The indicator measures what share of pre-retirement income is maintained through pension payments. In the OECD model, the pension age in the United Kingdom is 68.
Spain and Italy provide a larger share of income
The difference with some other European systems is significant. For the same type of insured career, the OECD calculates a replacement rate of 80.4% in Spain and 70.6% in Italy. In France, the figure is 56.6%, while in Germany it is 42.1%. Thus, the United Kingdom finds itself between countries with higher public pensions and countries where the state system also covers a smaller share of previous income.
The OECD specifies that these are theoretical calculations for a person who started working at the age of 22, earned the average wage and worked continuously until reaching pension age. They do not represent a forecast for a specific pensioner and do not necessarily show the average amount of pensions already being paid.
The Netherlands and Denmark rely on additional schemes
The comparison also shows why the size of the state pension alone does not provide the full picture. In the Netherlands, the public component provides a replacement rate of around 28.6%, but when mandatory occupational schemes are included, the overall figure reaches 74.7%. Denmark uses a similar model, in which state payments are supplemented by occupational pension provision.
The United Kingdom also relies on this combination. The low public payment is part of a system in which employer and personal pension contributions play a greater role in total income after retirement. Therefore, an assessment of the British model depends on whether only the state pension or all mandatory and additional sources of income are being compared.
Demographics increase the pressure
The long-term problem facing European pension systems is linked to an ageing population and a decline in the number of workers relative to pensioners. The European Commission and the Social Protection Committee expect replacement rates to fall over the coming decades in most European Union countries.
This leaves countries facing a similar choice – higher contributions, later retirement, more limited growth in payments or a greater role for occupational and private savings. The United Kingdom is already among the countries where the state pension accounts for a smaller share of retirement income, but supplementary provision plays a greater role.
Sources: telegraph.co.uk, euronews.com