Newly updated research has discovered that during the ongoing cost of living crisis, people in the UK claiming their State Pension entitlement only just break even despite a record-breaking increase to weekly payment rates in April. The research, conducted by pension advisors Almond Financial, looked at the uprated State Pension in comparison to the average cost of living in the UK.
Almond Financial then looked at similar data in all of Europe’s 50 countries to establish which country offers the most to retirees in comparison to the country’s current cost of living data. It then analysed the average cost of general living expenses such as food shopping, the price of a meal at a restaurant and energy bills to discover an estimated cost of living per month, excluding rent.
Its findings revealed that Spain is still the most cost-effective country to live in, providing pensioners with a monthly state-funded income of just over £2,287, which helps to pay for cost of living expenses averaging £56.
The Spanish pension system pays out a maximum of €2,617.53 (£2,287.24) per month, the equivalent to a whopping £1,484.92 more than the UK State Pension (£802.32 per month). Coupled with the country’s low cost of living, pensioners can expect a comfortable retirement in the sun.
The UK slipped down one spot from earlier in the year to finish 16th in the Pension Breakeven Index, just 17.09 per cent above the pension income breakeven point.
The UK State Pension pays just £114 more than the average cost of living for a pensioner, but as the economic crisis continues, the monthly costs are expected to continue to rise over the coming months, leaving little room for an unexpected emergency for Britain’s 12.6million pensioner population.
Rounding out the rest of the top five is Belgium, Luxembourg, Bosnia and Herzegovina and Cyprus. However, the Pension Breakeven Index also provides insight into how much each country is paying pensioners who reach state retirement age.
Based on the findings in the index, pensioners in Luxemburg receive an impressive £3,050.57 each month. The full New State Pension in the UK is worth up to £815.40, however it is paid every four weeks but in relation to the data it is still considerably lower than several other countries in Europe.
Top 10 European countries paying highest State Pension monthly amounts
- Luxembourg - £3,050
- Belgium - £2,709
- Spain - £2,287
- Switzerland - £2,123
- Liechtenstein - £2,061
- Denmark - £1,647
- Norway - £1,579
- Iceland - £1,524
- France - £1,497
- Cyprus - £1,485
You can view the full Pension Breakeven Index which includes cost of living expenses here.
Commenting on the study, principal financial adviser at Almond Financial, Sam Robinson, said: “The UK has a system that is just above the breakeven point which means at present, there isn’t much room to manoeuvre for those battling the cost of living crisis. And while it is positive that the UK finds itself among the top half of countries, for how much longer is the question.
“While the increase in State Pension in line with inflation is needed and welcomed, it's clear that those over 66 need to look at other options rather than just relying on the State Pension.
“Planning for life after work is crucial and it’s important to seek advice from a pension advisor if you aren’t sure where to start.”
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