Academic Scientific JournalsHOW TO MEASURE FINANCIAL WELL-BEING OF PENSIONERS? VARIETIES OF EU PENSION SYSTEMS BASED ON BENEFITS
Varieties of EU pension systems based on benefits
DOI:
https://doi.org/10.26881/wg.2025.1.07Keywords:
pension system, III pension pillar, retirement saving, welfare statesAbstract
Purpose. Pension systems are the basis of old-age security. Comparing them across EU Member States is a complex process due to the differences in benefit calculation methods, taxation of pensioners’ income and the role of the private sector. This article aims to present a measure of the financial well-being of pensioners in the EU and to identify similarities between countries in terms of benefits. Five indicators were considered: nominal income, replacement ratio, lack of poverty, public pensions to GDP, and ability to spend on pleasures.
Methodology. Hierarchical cluster analysis using Ward’s method was used to identify similarities between countries. An index of retiree financial well-being was developed using the Zero unitarization method.
Findings. The study proposes a broad measure of pensioners’ financial well-being. This metric encompasses not only the public pensions, but also private pillars and wealth accumulated outside the pension system. Significant differences in the well-being of pensioners across EU countries has been identified. Hierarchical cluster analysis confirmed a relationship between the different models of capitalism in the EU and the current pension provision. The highest pensions were identified under the pay-as-you-go basis, which casts doubt on the possibility of maintaining their level in the future.
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