Which country has the best state pension?

Following the announcement that the state pension would rise by 8.5% this year, research from Standard Life showed that 22% of adults still don’t know what state pension they will be receiving. This rose to 29% for those aged between 55 and 64, which either demonstrates a lack of pension knowledge or a lack of concern for those already at pension age.

It’s no secret that the UK state pension is known for being insufficient for a complete source of income in retirement, often unable to cover even the basic costs of living. This situation has been exacerbated by rocketing inflation over recent years. However, even for those with higher incomes, the state pension remains a valuable additional income source and an essential one for those who earn little or no additional retirement income.

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It’s worth remembering that not everyone gets the same state pension amount. How much you get depends on your National Insurance record. For many people, the State Pension is only part of their retirement income, as the maximum a person in the UK can receive from their state pension currently is £221.20 a week for the 2024/25 tax year. Instead, they may also have money from a workplace pension, other pension and/or earnings, which is increasingly essential.

Sadly, even those who are able to access the current maximum £11,502.40 a year are still almost £3,000 shy of what is considered, by the pension industry guidelines, to be the amount required to have a minimum standard of living. And following the Governments freeze on allowances, many more pensioners, even on low-income levels that push them over the annual allowance, will be paying more tax. In fact, charities including Age UK, have reported an increase in concern among pensioners who fear being dragged into paying income tax.

How the state pension compares across the world

While the state pension is certainly not enough to live on alone, it’s interesting to see what the state pension looks like in other major countries to get a complete picture of where the UK stands comparatively.

In the UK, if you have 35 years of National Insurance contributions, you are currently eligible to receive the full state pension amount of £958 a month. Between Australia, Denmark, France, Germany, the Netherlands, Spain and the United States, the UK has by far the lowest state pension, according to recent figures from This is Money. Most offer between the equivalent of £1,500 - £2,500 a month, with Spain offering the equivalent of £3,060, more than triple what the UK state pension pays to pensioners.

One reason for this is due to the UK’s flat-rate pension. You get the same amount regardless of earnings, while in many other countries the state pension is linked to your earnings. This means that while the maximum may be high in other countries that have pensions based on earnings, this would not necessarily be what the average pensioner would receive, with many receiving less than the flat-rate amount offered for UK pensioners. The flat-rate approach is more beneficial for those on low incomes and, by the same token, higher earners in the UK get less from the state pension than their international counterparts who are enrolled in systems based on what they earn.

Another point of comparison to consider is what is required to access these state pensions. In the UK, you are required to have 35 years’ worth of National Insurance contributions before you can access the modest state pension on offer. By contrast, the Netherlands, which offers a more attractive £1,230 a month, requires a full 50 years’ worth of National Insurance contributions. Even though the state pension is higher in the Netherlands, the extra 15 years of National Insurance contributions that you have to make, should not be understated.  

If you’re thinking about or approaching your retirement and would like to speak to an expert to assist in mapping out your financial future, why not get in touch. We’re offering all of those with £100,000 or more in pensions, savings or investments a free initial consultation.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

This article is based on our understanding of Government practice as at 6 April 2024. 

This article is accurate and correct as the time of writing 01/05/2024.