Julien Reszka
Add up two ordinary bills, pension contributions and rent, and even in the cheapest country checked the total clears 40 percent of what is left after tax. In the most expensive it clears two thirds.
Both figures need to be measured the same way to compare fairly: as a percent of disposable income, the money actually left in a paycheck after tax. Pension contribution rates are usually quoted as a percent of gross salary instead, which hides how large they really are.
All figures below are a percent of disposable income.
| Country | Pensions | Rent | Both |
|---|---|---|---|
| Italy | 46.2% | 20.2% | 66.4% |
| Finland | 35.2% | 30.6% | 65.8% |
| France | 35.4% | 30% | 65.4% |
| Spain | 38.0% | 26.7% | 64.7% |
| Austria | 33.8% | 23.0% | 56.8% |
| Sweden | 23.9% | 30.3% | 54.2% |
| Greece | 27.1% | 25.8% | 52.9% |
| Germany | 30.3% | 22.2% | 52.5% |
| Czech Republic | 35.6% | 13.4% | 49.0% |
| United States | 16.4% | 31.1% | 47.5% |
| Poland | 25.8% | 20.2% | 46.0% |
| Japan | 23.6% | 19.9% | 43.5% |
| Canada | 16.0% | 26.2% | 42.2% |
| United Kingdom | 10.4% | 30.1% | 40.5% |
The range is wide. The United Kingdom is the floor at 40.5 percent, and Italy sits at the top, 66.4 percent, followed closely by Finland at 65.8 and France at 65.4. The cheapest country in the table still spends two of every five pounds, dollars, or euros of take home pay on just these two things, the most expensive spends two of every three, and eight of the fourteen countries checked clear 50 percent. Nobody here is spending a small share of income on these two costs alone.
Which of the two costs more on its own varies by country. Pension contributions alone outweigh rent in most of Europe once both sit on the same disposable income basis: Italy's 46.2 percent against 20.2 percent for rent, Germany's 30.3 percent against 22.2 percent. Rent wins outright in Sweden, the United States, Canada, and the United Kingdom.
- The comparison treats the employer's share of a pension contribution as fully borne by the worker, standard tax incidence economics, not a measured accounting fact
- The United Kingdom and Canada rent figures come from a different survey than the Eurostat based figures used for the rest of the table
Switzerland, Ireland, Denmark, and South Korea are left out entirely. Switzerland because its clean pension figure only covers the state layer and leaves out a large mandatory occupational scheme that cannot be reduced to one rate, the other three for lack of any clean, comparable figure at all.
Your Pension Depends on Kids You Did Not Have argued that pay as you go pensions are structurally strained by a shrinking base of workers per retiree. This adds the other half of the picture. Before that ratio gets any worse, rent and pension contributions between them are already consuming a large share of a paycheck in every country checked, and a majority of a paycheck in most of them. There is very little room left to absorb a system that keeps getting more expensive, and hardly anyone has actually added up the two numbers to see it.
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