Which countries cover the cost of living?

Around the world, governments administrate state pensions to minimise poverty in old age and ensure that citizens can enjoy a standard of living comparable to their working years. The UK has had state pensions of different types since 1908, and the present National Insurance-based system came into effect in 1948.

In the UK, the full basic State Pension for men born before 6 April 1951 and for women born before the same date in 1953 is £176.45 per week. But since 2016, eligible workers instead qualify for the new State Pension, which is £230.25 a week as of October 2025. Many people choose to pay into a work or private pension to supplement their retirement income.

UK employees need at least 10 qualifying years on their National Insurance record to claim the new State Pension, and you can use this government calculator to find out when you will reach State Pension age. There is no forced retirement age, and you can keep working when you start receiving your pension unless it is forbidden by law or by health and safety standards for your particular job.

The triple lock was introduced to keep the value of the state pension in line with the cost of living or the incomes of working people. The three measures by which the pension level is maintained are inflation (using the Consumer Prices Index), the average increase in UK wages or 2.5% – whichever is highest. The present government has pledged to keep the triple lock in place, but it remains under scrutiny as the cost of pensions has deviated from predictions.

As part of our new study, Moorepay calculated that the current UK state pension covers 120.31% of the average basic cost of living, using Numbeo’s cost of living estimates. That puts the UK outside the top 20, just behind Ireland (125.74%). A UK retiree on a state pension should have £2,018.76 surplus after covering basic costs. As a comparison, this is just over a quarter (25.4%) of that enjoyed by retirees in Germany.

To compare pension rates against the local cost of living around the world, we sourced reputable reports to find the average state pension rates in each country for a single person, urban, just retired and without capital income. Then, we used Numbeo cost-of-living values for each country to calculate the percentage of local living costs covered by each pension on average.

First, we calculated the value of each country’s state pension as a percentage of the local cost of living around the world. We found that Kuwait’s pensioners can best meet the cost of living, with the state pension worth 16,308 Kuwaiti dinars (£39,170.84) per year, which is 566.14% or 5.7 times the annual cost of living. 

The Kuwait state pension is paid as a percentage of the individual’s late-career salary, and the average varies between sectors; by one estimation, it’s 1,450 dinars per month in the government sector, 1,850 dinars in the oil sector and 1650 dinars in the private sector.

We identified three European countries where the state pension covers more than twice the basic cost of living: Luxembourg (225.00%), Italy (209.60%) and Finland (208.23%). In all three countries, the state pension is partly calculated to reflect the working-life salary of the retiree. Italy has one of Europe’s highest average pensions compared to the average salary. But it also has Europe’s oldest population, and reform of the Italian pension system is currently a hot debate in the country.

Nepal was the first South Asian country to introduce an old-age allowance in 1995, and in recent years the Nepalese government has reduced the age of retirement while improving its minimum pension offer. But the state pension remains low in the face of Nepal’s ongoing socio-economic challenges and covers the lowest percentage of basic living costs of any state pension – just 7.84%.

Next, we used the data to calculate the surplus or deficit that the average pensioner has in each country after covering basic costs with the state pension.

We found that the average surplus for a Kuwaiti state pensioner after covering basic living costs equates to £32,251.90, which is 2.3 times as much as second-placed Luxembourg (£13,822.80) and nearly 16 times the UK’s figure (£2,018.76). The UK sits just outside the top 20 below, with the 21st-highest pension surplus after the basic cost of living.

Pensioners in England and Wales may also receive a Winter Fuel Payment of £100-£300 unless they have an annual income of over £35,000. Other support funds, such as the Cold Weather Payment, Warm Home Discount and Household Support Fund, are also available, and many UK pensioners are eligible for TV licence concessions and Council Tax Reduction.

Those in countries where the state pension doesn’t cover the basic cost of living face a steep challenge. Jamaica’s state pension covers just 13.44% of the cost of living, the third-lowest proportion of any country. Due to the relative strength of the currency, though, the Jamaican pension deficit is the highest, with the average pensioner falling £7,062.25 short of requirements each year.

This is despite the government raising the state pension by up to 74% in 2023. “Pensioners are among the groups that have been ravaged by the recent high inflation,” explained Prime Minister Andrew Holness at the time. Further small increases were made in 2025, along with the development of the AmAlive mobile app, to make it easier for pensioners to provide proof of life and continue claiming their pension.

Finally, we collated every country’s average state pension into the navigable table below, listing them in their local currency, GBP, USD and international dollars ($Intl), a hypothetical currency the World Bank uses to compare the buying power of local currencies, and which reflects the “comparable amount of goods and services a U.S. dollar would buy in the United States.”

The UK ranks 28th when converting the state pension to international dollars. The annual pension would buy $17,607.35 worth of goods in the U.S. This ranks the UK between Turkey ($Intl17,924.16) and Estonia ($Intl16,903.45) in terms of how far the state pension actually goes. Due to Italy’s relatively high pension and low cost of living, the Italian station pension converts to $Intl36,606.49. Only Kuwait ($Intl85,831.58) and Bahrain ($Intl57,741.18) boast higher figures.

Methodology & Sources

To find out which countries have the state pensions that cover the highest percentage of living costs, we conducted manual research in each country to source reputable reports of the average state pension rates.

We considered a single person, urban, just retired and without capital income.

We then sourced Numbeo cost of living values for each country to calculate the percentage of living costs covered by each pension on average.

Data is correct as of October 2025.