A] Prelude
For more information on pension systems, risk and coverage, feel free to visit our dedicated webpages:
- https://expatpensionholland.nl/global-pillars-systems
- https://expatpensionholland.nl/global-investments-risks-0
- https://expatpensionholland.nl/global-social-security-coverage
For even more information about this topic feel free to visit the following external sites:
- https://www.visualcapitalist.com/ranked-how-much-of-your-income-pensions-replace-in-retirement/
- https://www.oecd.org/en/publications/2025/11/pensions-at-a-glance-2025_76510fe4/full-report/average-wage_da2c17cc.html
B] The Issue
How much of your paycheck would a pension replace in retirement? Depending on the country, the answer ranges from more than 80% to even less than 20%.
C] The Details
This graphic ranks countries by their projected gross pension replacement rate, based on data from the OECD. The rate compares pension benefits with pre-retirement earnings, with both measured before taxes and contributions. Estimates are for an average earner entering the workforce at age 22 in 2024 and include mandatory public and private pensions, but exclude voluntary private retirement savings.
D] Spain Leads…
Southern European countries dominate the top of the ranking, with Spain, Greece, Portugal, and Italy all placing in the top 10. Spain and Greece stand out at even 80.4% and 79.6%, respectively. At the bottom, Lithuania’s replacement rate is just 17.4%, less than one-quarter of Spain’s 80.4%. South Korea and Japan also rank relatively low, at 33.4% and 36.5%, respectively.
It is very interesting to see that national prosperity is not a reliable predictor of pension replacement rates. Mexico and Türkiye are both near 70%, while Germany stands at 42.1% and the U.S. at 39.7%, reflecting substantial differences in how national retirement systems are structured.
E] Low Pensions & High Poverty
A low replacement rate does not automatically mean high senior poverty, but several countries near the bottom of the pension ranking also have elevated old-age poverty rates. In Lithuania, more than 20% of people aged 65 and older live in relative income poverty.
The pattern extends across the Baltics. Old-age poverty exceeds 30% in Estonia and Latvia, compared with an OECD average of 14.8%. In the U.S., the rate is also relatively high at 22.9%. At the other extreme, the Netherlands combines a 74.7% replacement rate with an old-age poverty rate of just 4.6%. Denmark, Finland, and Norway also have poverty rates at or below 5%.
F] Conclusion
So what is the conclusion? Replacement rates are only one part of retirement security but these comparisons do show how differently pension systems replace workers’ earnings across the OECD.
As EPH we find the provided numbers relevant and indicative. To have a clear interpretation of the countries it will also be relevant and highly interesting to see what the impact on the numbers will be during the next 10 years when many countries will have started to adjust their social security and pension systems to increased longevity.
That might result for example in a different ranking for Spain.
(Sources: visualcapitalist/OECD/EPH)