Pension Ceilings
A pension ceiling usually refers to an upper limit (in euros) on paid-out pensions. The pension ceiling is usually implemented by setting a pensionable earnings cap, that is, an upper limit on the amount of a person’s earnings that would count towards their pension.
In the Finnish earnings-related pension scheme, there is no upper limit on a wage earner’s income (pensionable earnings) or the amount of pension paid (pension ceiling). In many other countries, however, the pension accrued within the statutory earnings-related pension scheme is limited by a pensionable earnings cap or a pension ceiling.
In most countries, the pensionable earnings cap that limits the pension accrued within the statutory earnings-related pension scheme is typically set at around 1-2 times the country’s average wage.
The pension ceiling can be broken with various supplementary pension arrangements that complement statutory pensions. In some countries, these arrangements are obligatory. Generally speaking, the lower the pensionable earnings cap is in a country, the higher is the role of supplementary pension schemes that break the ceiling. However, the scope of these schemes varies from one country to another.
The following graph compares the pensionable earnings cap and average wages in various countries. In most countries, the pension earnings cap that limits the amount of pension a person can accrue in the earnings-related pension system is 1-2 times the country’s average wage. The table after the graph shows the pension ceilings (in euros) in certain countries, rounded to the nearest 10 euros.
In addition to Finland, there is no pension ceiling in countries such as Iceland, Estonia, Hungary, Portugal and Romania.
Pensionable earnings caps and pension ceiling of the statutory pension scheme in select countries (2022)
| Country | Pensionable earnings cap €/month | Pension ceiling €/month |
|---|---|---|
| Belgium | 5 960 | 3 000 |
| Spain | 4 140 | 3 060 |
| Italy | 8 750 | – |
| Austria | 6 620 | – |
| Greece | 6 500 | – |
| Luxembourg | 11 570 | 9 190 |
| France (regime general) | 3 430 | 1 710 |
| France AGIRC-ARRCO (supplementary pension) | 27 420 | – |
| Sweden | 4 180 | – |
| Germany: old states | 7 050 | – |
| Germany: new states | 6 750 | – |
| Norway | 6 530 | – |
| Switzerland | 7 140 (BVG) | 2 380 (AHV) |
| USA | 11 630 | 3 400 |
| Canada | 3 950 | 870 |
AHV = Mandatory pension system in Switzerland
BVG = Supplementary pension scheme in Switzerland