A large share of citizens of retirement age, as much as 27% of this population, is being pushed inexorably toward the threshold of extreme poverty, while remaining excluded from the benefits brought by economic growth. The latest official figures show that the average pension for those who retired in 2025 was 16,000 lek, marking an annual decline of 3%.
Meanwhile, 55% of pensioners in the country receive a partial pension, which on average does not exceed 13,500 lek per month. This situation runs counter to the fact that Albania is classified as an upper-middle-income country, while according to the World Bank the poverty line requires at least $249 per month. The public pension scheme is being worsened by the breakdown in the ratio between contributors and beneficiaries, as the burden of the elderly’s survival is shifting to their children and families, creating a chain effect. Surveys show that more than 87% of the elderly cannot cover their needs with the pension they receive.
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After Albania’s economic recovery following the pandemic, the starkest contrast that stands out is that between economic growth and the impoverishment of the elderly.
Although from 2021 to 2025 the country’s economy expanded by more than 24%, this growth was at no point reflected in the incomes of pensioners and people under social protection.
On the contrary, their real incomes have fallen. Higher living costs and high inflation have completely eroded purchasing power, pushing 27% of the retirement-age population toward the extreme poverty line.
The latest official data clearly show the depth of this social crisis. The average pension for the new generation of pensioners last year fell to just 16,000 lek, or 3% less than for those who retired in 2024.
The income of this category is no longer keeping up with rising prices and is also declining in net value. Last year, around 55% of the country’s 641,085 pensioners were receiving partial pensions, while the average amount of that payment was only 13,500 lek.
This picture does not match the country’s international status. Albania, ranked as an upper-middle-income country, has a poverty threshold defined by the World Bank at daily spending of $8.3 per capita, meaning the subsistence minimum calculated for the country should be at least $249 per month.
The roots of this situation go back to 2014, when the last pension reform was undertaken. Through conditions tied to years of work, it made securing a full pension difficult, while even today the government is delaying correcting these shortcomings.
Frequent and uninterrupted changes in the structure of ministries left in the shadows a new reform launched specifically for pensions, while the size of this group is growing at alarming rates.
In the past year alone, 30,000 new pensioners were added to the social insurance scheme, a figure almost twice as high as the average of the last decade.
This increase has pushed the number of old-age pensions to more than 641,000, accounting for 27% of the country’s total population. But while the success of governance is measured by the well-being it manages to create for the weakest groups, in Albania the opposite is happening, as each year new old-age pensions are turning out to be lower.
Albanian pensioners have not only been left out of the benefits of economic growth, but are also facing the bill for higher costs that came as a result of wage growth and other incomes enjoyed by the rest of society, whether legally or illegally.
The number of pensioners is rising faster than that of contributors
Albania’s pension scheme is facing faster growth in beneficiaries than in contributors. The latest data clearly show that the historical trend has been broken.
The number of old-age pensioners has risen significantly, reaching 641,085 beneficiaries in 2025, up from around 557,000 in 2021.
Over the last five years, the system has added more than 84,000 pensioners, while in the past year alone the number of those who retired reached 33,518, nearly twice as many as a year earlier.
This expansion would not be a problem if the public scheme had seen contributors grow at the same pace. The Albanian model operates on intergenerational solidarity, where the direct contributions of the current workforce finance in real time the pensions of the older generation.
This mechanism remains sustainable only when the ratio between those who pay and those who benefit is favorable, but this ratio is precisely what is worsening every year. While pensioners increased by 84,000 from 2021 to 2025, contributors rose by only 80,000.
In fact, in 2025 the situation became even more unfavorable, as the number of new pensioners entering the scheme was 23% higher than the number of new contributors. These developments are linked more to demographic trends than to informality in the labor market, as population aging is being significantly accelerated by the departure of young people.
After the pandemic, during the 2021–2025 period, INSTAT reports that more than 166,400 Albanians emigrated than returned, and most of them are young. This productive group pays its contributions into German, Italian or British systems.
Left in the country are parents and grandparents who, once they retire, are forced to rely on an ever smaller and weaker base of domestic contributors, increasing the scheme’s deficit and receiving minimum pensions.
Another factor worsening the situation is the lengthening of the pension benefit period, as the average years after retirement have reached 23 years, up from 22.4 years in 2021. Rising life expectancy is increasing the benefit period year after year and, consequently, expenses as well.
As the number of pensioners rises, so does social pressure. In the past year, the government approved a monthly bonus as an addition to the pension, but it amounts to less than 900 lek per month. Because of the problems accompanying pension policy, it often remains hostage to electoral cycles and short-term interests, endlessly postponing deep structural reforms and creating costs for all sides.
In 2021, for every old-age pensioner there were 1.42 active contributors in the system. In 2025, this ratio fell to 1.36. Although the difference of 0.06 points seems small, the trend is continuous.
If there is no intervention, the scheme is heading toward a point where the contribution base will not be sufficient to cover obligations. In addition to the low number of contributors, Albania also faces high wage informality.
According to official data, 27% of employees in the first quarter paid contributions based on the minimum wage. If a contributor declares contributions on a salary of 50,000 lek but in reality earns 90,000 lek, the system receives only 40% of the contribution it should have secured.
354,000 people, average pension of 13,500 lek per month
During 2025, partial pensions accounted for 55.2% of all old-age pensions, increasing by 3 percentage points within one year, from 52.1% in 2024.
This category expanded significantly, reaching 353,983 beneficiaries in 2025, up from 316,781 a year earlier, or an increase of 11.7%.
By contrast, the number of those receiving a full pension fell, declining from 287,279 beneficiaries in 2024 to 283,677 in 2025, or by -1.3%.
In recent years, the number of citizens who fail to complete the full required years of work and end up with a partial pension has been increasing. Official data from the ISSH show that the average payment for this category was only 13,500 lek in 2025. Last year marked a real boom in new urban pensions, with around 54,676 new beneficiaries.
Of these, only 7,723 people received a pension with full years of work. Meanwhile, 42,594 people received a partial pension. This means that nearly 85% of new urban pensioners in 2025 retired without fulfilling the full required seniority in employment and, consequently, with lower pensions. In rural areas, the picture is the same. During 2025, out of 333 new old-age pensions in rural areas, 208 were partial, while only 125 were based on full years.
The pension amount is determined in relation to the years of contributions paid against the period required by law, which is gradually rising beyond 38 years. Most of these pensioners receive only a portion of the basic pension, often very close to the level of the social pension.
These payments are not enough to cover minimum living costs, especially in a reality where food prices and medical service costs are rising, while other wages are moving faster.
To survive, many elderly people with partial pensions are forced to work even after retirement age, often informally.
The replacement rate is worsening
The replacement rate shows what percentage of a person’s previous salary they receive as a pension after leaving work. If someone receives a pension equal to one-third of their salary, then this rate is 30%.
This indicator directly measures how well the state manages to preserve a citizen’s standard of living after they leave the labor market and enter old age.
According to International Labour Organization (ILO) standards, this percentage should be at least 40% to guarantee a minimum and dignified life. The European Union requires even more, aiming for consolidated systems to guarantee 50% to 60% of the average salary.
Today Albania is 10 percentage points below the ILO’s minimum threshold and, instead of improving, this gap is deepening year after year. The average pension last year amounted to 30% of the average salary, deteriorating sharply from 38% in 2021.
This decline occurred because wages in the public and private sectors rose faster than pensions, significantly weakening the purchasing power of the elderly. The national average salary rose by 47% from 2021 to 2025, while the average pension rose by only 16%, effectively reflecting only indexation for inflation.
The widening gap between wages and pensions comes at a time when rents, medicines, basic foods and healthcare expenses have risen significantly. With current payments, pensioners are lacking even the most essential needs for survival. But the effect of low pensions is not limited only to this group; it spreads across the entire economy. The first consequence is shrinking consumption.
Since pensioners spend almost all their income on basic products such as food, healthcare and energy, their financial decline directly affects consumption and retail trade. International studies show that elderly people with low incomes give up spending on healthcare because they cannot afford it.
These choices lead to delayed diagnoses and inadequate treatment, which then weigh on public hospitals as costly emergencies. A generation forced to get through the month with only 30% of the average wage completely loses the ability to participate in community life.
Being unable to afford family visits, cultural activities or even basic things such as eating meat or heating the home during winter creates deep economic isolation for this group.
