March the 9th, 2026 – Croatian retirees continue to endure the worst conditions in Europe, ranking concretely at the bottom of the list.
As Index/Vedran Salvia writes, in the vast majority of European countries, the average pension fails to cover the typical living expenses of retirees, and Croatia is at the very bottom of the entire continent in this ratio. This is shown by an analysis of data for 2023 that compares average annual pensions and the estimated consumption of those drawing them. While in some countries, pensions can still keep up with price increases, in Croatia the gap between income and expenditure is the largest in Europe.
This is shown by data from the analytical service Datapulse. The authors calculated the difference by comparing the average annual gross pension in each country with the estimated typical consumption of retirees, with all data standardised and presented for 2023.
the analysis provides a good insight, but there are caveats…
The analysis includes all European Union (EU-27) member states, then EFTA member states such as Norway, Switzerland and Iceland, as well as individual EU candidate countries, such as Serbia and Montenegro, provided that comparable data was available for them. The data was based on national averages, which don’t distinguish between full-time retirees and those with shorter or interrupted work careers, nor do they take into account the structure of pensions by years of service and contributions paid.
For a more complete picture of the adequacy of the pension system, it would be useful to compare the level of pensions earned after full-time work, in order to more clearly assess how much the system rewards long-term work and to what extent it ensures income stability when pensions are drawn.
The analysis defines costs as the estimated consumption of people over 60, i.e. a broader age group that does not exclusively include retirees. The ratio therefore doesn’t directly indicate whether the average pension can cover the consumption of a typical retiree. In addition, gross pensions are compared with consumption, which represents real, net household expenditures. Methodologically, it would be more comparable to observe net pensions and consumption. Tax differences between all of these countries also affect the real disposable income of retirees and can somewhat distort the picture provided by comparing gross pensions and consumption.
Despite these methodological limitations, such a comparison is still a valuable indicator of the general relationship between pension income and the cost of living. While it doesn’t truly provide a complete picture of individual standards or precisely measure the adequacy of pensions for each group of retirees, it does clearly show in which countries average incomes of older people are struggling the most to keep up with the price level. For Croatian retirees, the situation is quite clearly among the worst in Europe.
romania is at the top, and croatia is right at the bottom of the list
At the top of the list is Romania, the only country where the average gross pension significantly exceeds the estimated annual cost of living, with a positive difference of more than 20 percent. The Czech Republic and Poland follow, which also recorded a slight surplus, while Spain is only slightly above balance.
Western European countries record the highest nominal pensions, but these figures should be viewed in the context of the price level. For example, Luxembourg leads the continent with an average pension of €34,413 per year. On the other hand, pensioners in Serbia and Bulgaria receive the lowest nominal support, with annual pensions of €4,239 and €4,479, respectively.
a higher pension doesn’t automatically translate to a better standard of living
When these amounts are compared to the cost of living itself on a country by country basis, it turns out that a lower nominal pension in countries like Bulgaria can mean a more favourable income-expenditure ratio than a significantly higher pension in expensive Luxembourg. This is why wealthy countries like Norway, Germany and France may rank fairly poorly on this particular scale.
Croatia and Croatian retirees are right at the very bottom of the scale primarily due to the combination of relatively low pensions and the cost of living. Many would be quick to agree that it has come significantly closer to Western European levels in recent years, without wages or pensions matching up.
In Croatia, most pensions aren’t taxable due to personal allowances, so the difference between the gross and net amounts is small. This somewhat mitigates the unfavourable ratio, but doesn’t significantly change the overall position for the country’s pensioners, as pensions remain low in relation to the elevated cost of living.
“there are many reasons as to why croatian retirees have the worst situation in europe”
Economic analyst Dr. Predrag Bejaković delved deeper into the specific ins and outs of just why Croatia ranked so embarrassingly poorly.
“There are many reasons as to why Croatia is in last place on this ranking. This is primarily about the ratio between the working population and retirees. For every 130 people who pay pension contributions, there are 100 retirees. In addition, life expectancy has increased, by a total of about seven years. Of course, this is a massive human success, but it also means that more cash and resources need to be allocated to cover people’s retirement,” he says.
Bejaković added that Croatia has additional structural specifics that place additional burdens on the pension system.
“There’s a relatively large number of retirees from the former state (Yugoslavia) and the former JNA, which increases the total obligations of the system. Only about 60 percent of pensions are actually financed from contributions, while the rest is covered by transfers from the state budget. All of this together creates pressure on the sustainability of the system and explains why the ratios are far less favourable,” he said.
early retirement also poses a problem
“The problem doesn’t only lie in the relatively early retirement habits of many Croats, but also in the relatively short work experience garnered. The average Croatian retiree has about 35 years of service under their belts, which is less than a full working life. The generations that went to university en masse twenty or thirty years ago often entered the labour market later, and therefore paid contributions for a much shorter period,” he said.
“In more recent years, certain improvements have been recorded, especially among women, who are increasingly staying in the world of work longer, but the situation is still unfavourable. For pensions, the withdrawal age is gradually increasing, but for disability pensions it is still very low, on average around 54 years for men and around 52 years for women.
At the same time, pensions are being used for a long time: on average for around 19 years, and for women for almost three entire decades. Such a combination of a relatively short working life and a long period of pensions being drawn use creates strong pressure on the long-term sustainability of the system,” he explained.
historical contexts (in true croatian style) matter here too
“When the pension system was introduced back in 1922 in the Kingdom of Yugoslavia, and came into being shortly before World War II, people often worked until the age of 70, and life expectancy was much shorter than it is today. In today’s far more modern conditions, early retirement with a significantly longer life expectancy puts an additional strain on the entire system. Extending working life in itself will not solve all of these structural problems, but it can alleviate pressures,” he said.
He also noted that frequent changes to legal provisions further create uncertainty among the population.
“Some people decide to retire early because they fear that future conditions may be less favourable than they are today. The system should, as a rule, clearly reward staying in the world of work longer and penalise leaving earlier, but frequent changes to the rules undermine trust. In practice, it still pays off for many people to retire early because they use their pension for a longer period, even though they paid contributions for a shorter period,” he said.
croatia isn’t all that unique
He also emphasised that Croatia, despite its deeply unfavourable position, is not a unique case in the European context.
“Slovenia is close to us in some indicators, and Germany, despite its higher standard, doesn’t really have a dramatically more favourable ratio either. Increasing contributions isn’t a simple solution. Excessive burdens in a country with a relatively weak tax culture could encourage more work in the shadow economy. Each country has its own specifics.
Examples show that systems are changing. Poland, for example, reformed and reduced the funded part of the system, while Croatia retained the second pillar, which remains a good thing in my opinion. At the same time, wealthy Norway doesn’t have a ratio that is many times better than other developed countries, which shows that the level of wealth in itself does not guarantee perfect sustainability,” he concluded.
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