A growing share of Europe’s elderly population faces the prospect of poverty in retirement, with one in five Europeans already at risk, according to the European Insurance and Occupational Pensions Authority (EIOPA). The warning highlights the long-term fragility of Europe’s pension systems, many of which are struggling under demographic and economic pressures.
Petra Hielkema, EIOPA’s chair, told Politico that the figures are “shockingly high,” with women facing a 30% greater risk of pension poverty compared to men. She warned that countries without strong supplementary pension systems are particularly vulnerable.
Rising strain on pension systems
For decades, most European countries relied heavily on state pensions to support older citizens. But repeated economic crises, austerity measures, and increasing life expectancy have weakened these systems. Today, the continent is aging rapidly: within 40 years, only 1.5 workers will support each pensioner—half the current ratio.
EIOPA has called for radical reforms, including private retirement savings schemes and digital pension tracking tools, to help citizens prepare for the future. The European Commission is expected to issue recommendations later this year, including incentives for retirement savings and reforms of workplace pension funds.
Greece: a dramatic case
Nowhere are the pressures more evident than in Greece, where pensions remain among the lowest in Europe despite years of reforms. According to the government’s “Helios” database, the average old-age pension stands at just €843 gross per month, with supplementary pensions averaging €196 and dividends €113. Six out of ten main pensions fall below €1,000 gross.
Many retirees in Greece continue to work out of necessity, often in unsafe conditions that expose them to workplace accidents. Experts describe this as a phenomenon of “pension poverty,” worsened by low wages that guarantee even smaller pensions in the future.
The Greek government is reportedly considering further raising the retirement age due to demographic pressures, following the lead of Denmark, which recently moved the pension age to 70 for younger generations.
Migration and Europe’s workforce dilemma
Amid calls to extend working lives, European leaders face a paradox: while migration is often framed as a threat, migrant labor is playing a crucial role in sustaining Europe’s economies and pension systems.
European Central Bank President Christine Lagarde recently noted that foreign workers, though only 9% of the EU labor force in 2022, accounted for half of economic growth over the past three years. Without their contribution, she said, growth would have been weaker and labor shortages more severe.
She cited Germany and Spain as examples: Germany’s GDP would be around 6% lower today without migrant workers, while Spain owes much of its recovery to them. Migration, Lagarde stressed, has helped offset falling birth rates and shorter working hours across Europe.
