Economy 31 May 2024, 9:26am

Hungarian pensions still do not perform well in EU comparison

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There are significant differences in pensions across Europe and a strong positive correlation between financial awareness of retirement and the level of monthly pensions. The report found that for Europeans aged 65 and over, earnings-related pensions are the primary source of income. However, less than half of EU consumers are confident that they will have enough money to live comfortably in retirement, raising concerns about the adequacy of pensions. Hungary has one of the lowest levels of monthly pensions not only in the EU but also in Europe, according to a Euronews Business report.

According to Eurostat data, the average monthly gross old-age pension expenditure per beneficiary in the EU in 2021 - the latest data available - varied widely, from €2,575 in Luxembourg to €226 in Bulgaria, while the EU average was €1,224. Including the wider European Free Trade Association (EFTA) and the EU candidate countries, Iceland reported the highest average of €2,762, while Albania reported the lowest at €131, the portal reports.

In Hungary, the average monthly pension was €398 over the period, with only Lithuania (€394), Croatia (€388), Slovakia (€386) and Romania (€382) having lower benefits.

The old-age pension per beneficiary exceeded the EU average in each of the EU's 'big four' countries: Italy had the highest pension per beneficiary, at €1,561, while France, Spain and Germany were close to the same, at around €1,450. The Scandinavian countries also performed well, with average old-age pensions exceeding those of the 'big four' countries. The seven worst-ranking countries are all Balkan countries, with Luxembourg's average expenditure on old-age pensions almost 11 times that of Bulgaria.

Hungary is in the bottom house at €7608 per year. But the situation is worse in Bulgaria (€5241), Slovakia (€5651), Croatia (€6955) and Lithuania (€6963).

Measured in purchasing power parity (PPS), the differences are significantly smaller, with the average old-age pension ranging from 437 in Bulgaria to 1681 in Luxembourg. This means that a Luxembourg pensioner received almost four times the gross pension of a Bulgarian. According to the European Insurance and Occupational Pensions Authority (EIOPA) Eurobarometer 2023 survey, only 42% of EU consumers are confident that they will have enough money to live comfortably in retirement, with significant differences between countries.

Only 30% of people in Hungary feel they will be able to live on their pension.

Euronews Business has found a strong positive correlation between the level of financial confidence needed to live comfortably in retirement and the monthly amount of the old-age pension. This correlation indicates that countries with higher pensions tend to have higher levels of confidence, while countries with lower pension amounts tend to have lower confidence. They recall that the European Parliament has highlighted the risk of poverty in old age and has made a number of recommendations to strengthen the sustainability and adequacy of EU pension systems.

The significant differences in pension systems make it challenging to compare international pension levels, and the figures do not necessarily reflect the level or adequacy of individual old-age pensions in each country.Cover Photo: Getty Images