Mandatory pensions are projected to fall short of the OECD’s retirement income target in 22 of the 30 European countries it studied.
In its Pensions Outlook 2026, the OECD estimates how much extra employees on average wages would need to save over a full career to retire on 70% of their gross pay.
Lithuania has the biggest gap as a share of earnings, at 20.7%, while Switzerland has the highest estimated monthly contribution, at more than €1,000 a month for men on average wages.
The OECD calls this the contribution gap. It is the extra share of earnings employees would need to put into a voluntary pension plan, on top of their mandatory contributions, to reach the target.
How much income people need in retirement depends partly on what they expect to spend. “There is no universal retirement income objective. Instead of using target replacement rates, one could use consumption benchmarks, which are target expenditure levels to reach specific lifestyles in retirement,” Stéphanie Payet, a policy analyst at the OECD, told Euronews Business.
The OECD calculates the contribution gaps, which vary from 0.4% in Turkey to 20.7% in Lithuania among male employees with average earnings. The rates are mostly the same for women. But in Poland and Hungary, the gap for women is 8.6 and 2.9 percentage points higher, respectively.
The gap is in double digits in many countries: Ireland (19.4%), Poland (17.3%), Croatia (15.7%), Slovenia (12.5%), Latvia (12.3%), Estonia (12.2%), Switzerland (12.1%), Germany (11.1%), Belgium (10.7%) and Iceland (10%).
“Where gaps are large, this means that people are often under-saved, and so they won’t have enough to have a good standard of living in retirement,” Professor Iain Clacher of the University of Leeds told Euronews Business.
Among other major economies, the gap is 9.1% in the UK and 6.2% in France.
It is smaller in Bulgaria (4.4%), Slovakia (3.9%) and Sweden (2.2%). Turkey has the smallest positive gap, at 0.4%.
In Austria, Denmark, Greece, Italy, Luxembourg, the Netherlands, Portugal and Spain, mandatory pensions are expected to meet the OECD’s retirement income target for men on average wages.
How much extra would workers need to save each month?
Euronews Business applied the OECD’s contribution rates to average gross wages in 2025. The same percentage can translate into very different amounts depending on what workers earn.
At 2025 average gross wages, the estimated extra contribution for men ranges from about €5 a month in Turkey to €1,084 in Switzerland.
The figure exceeds €500 a month in Ireland (€974), Iceland (€716), Germany (€617), Belgium (€556) and Norway (€532).
In the UK, a man on the average wage would need to save about €494 a month to reach the OECD benchmark. The figure is €238 in France, €64 in Slovakia, €68 in Bulgaria, €91 in Sweden, €111 in Romania, €129 in Hungary and €360 in Poland.
Even a relatively small monthly contribution can be a burden where wages are lower. Average gross monthly earnings in 2025 ranged from €1,549 in Turkey to €8,957 in Switzerland. They were €5,558 in Germany, €5,445 in the UK, €4,195 in Sweden, €3,830 in France, €2,078 in Poland and €1,772 in Hungary.
At those wage levels, a retirement income equal to 70% of earnings would be about €1,084 a month in Turkey and €6,270 in Switzerland.
Why do contribution gaps differ?
Payet said the differences are directly linked to how much income employees can expect from mandatory pensions. The replacement rate measures pension income as a share of a worker’s earnings before retirement.
“A lower replacement rate from the mandatory pension system means that you will need to contribute more on a voluntary basis to reach the target replacement rate,” she said.
Professor Traute Meyer of the University of Southampton linked Poland’s large pension contribution gap to state pension cuts after the transition from state socialism to a market economy. She linked Ireland’s large gap to the country’s traditionally low mandatory pensions as a liberal welfare state. She pointed to Sweden’s strong public pension mandates, rooted in social democratic governance, as a reason for its smaller gap.
“Low gaps may also mean only formal workers are protected, leaving many outside mandatory coverage (Turkey),” she said.
Purchasing power of money in retirement
Professor Lauri Leppik of Tallinn University said a small contribution gap tells us little about what a mandatory pension can buy in countries such as Turkey.
Clacher added that “The contribution gap alone does not give a clear picture as the other factor that is important is the purchasing power of money in retirement”.
Pension income varies widely across Europe. In 2023, EU spending on old-age pensions averaged about €1,440 a month per beneficiary, according to Eurostat.
That figure covers people already receiving a pension, including those with shorter careers. The OECD benchmark is for employees entering the labour market who go on to complete a full career.
Retirement poverty
Meyer pointed to the risk of poverty in retirement.
“Research consistently shows that voluntary retirement saving is insufficient, especially among lower earners. People underestimate future needs, prioritise current demands, distrust private schemes or lack the means to save,” she told Euronews Business.
What could change before workers retire?
The contribution gap is a forward-looking measure. It does not tell us anything about current pensioners. “It is based on expected replacement rates for workers entering the labour force today, assuming the rules of the pension system will remain the same until these workers retire,” Payet said.
The projections include changes already written into law, including scheduled increases in retirement ages. Professor Marek Góra of the Warsaw School of Economics said further changes could affect how much workers need to save. In his view, higher retirement ages would reduce the need for extra savings, while lower replacement rates would increase it.
“As a result, the actual need for voluntary additional retirement savings is less clear-cut than the estimates suggest,” he said.
How does the contribution gap work?
Payet gave the example of an average earner whose mandatory pension is expected to replace 50% of their earnings. Under the assumptions in her example, putting about 9% of earnings into a defined contribution pension plan from age 22 until retirement would cover the remaining 20 percentage points.
Take a worker earning €3,000 a month just before retirement. The 70% target would give them a gross retirement income of €2,100 a month. If their mandatory pension paid €1,500 a month, the shortfall would be €600 a month.
At a wage of €3,000, a 9% contribution comes to €270 a month. The worker would save the same share of earnings throughout their career, so the amount in euros would be lower when they earned less. Under the assumptions in the example, those contributions and their investment returns would provide the extra €600 a month in retirement.