Purpose: The article discusses financial aspects of the functioning of pension systems in selected countries of the European Union. Changing demographic conditions (aging populations) pose a serious challenge to the financial stability of pension systems in Europe. This article discusses the differences between the pension systems of two selected European countries - Poland and Germany - in terms of pension expenditure, the efficiency of these systems and changes in financing between 2021 and 2024. The aim of this article is to analyze the issue of financing in two representative countries: Poland and Germany, to identify differences in the pension systems in these countries, and to highlight the main challenges they face. The hypothesis is that the pension system in the European countries studied is not a sustainable pension system, assuming that the amount of pension contributions collected is sufficient to pay current pension benefits. Design/methodology/approach: The objective of the article was achieved by verifying secondary sources and conducting a comparative analysis in formal and financial terms. The article draws on literature on social security and social insurance, both in the field of economics and law. The legal sources, materials, and statistical sources were used to present the issues. In addition, materials available on the Internet, including those published by Eurostat, MISSOC, and the OECD, were used in the study. Findings: The data presented in the article concerning two representative countries of the European Union and the financial efficiency indicators of the Polish and German pension systems presented in the article confirm the hypothesis put forward in the article. Contemporary pension systems in highly developed countries are struggling with many problems, mainly resulting from demographic processes. Aging societies and declining birth rates are contributing to changes in the population structure. As a result, there is an increasing need to reform pension systems to adapt them to the current demographic situation. Every pension system reform is a long-term and multifaceted process, and there is no single universal solution that would fully resolve all problems. It is important to take into account the unique demographic, social, and economic conditions of a given country and to rely on broad social consensus. Despite the differences in institutional solutions in individual countries, both the reforms that have been implemented and those merely proposed by the European Union show a common direction of change. This consists of striving to ensure the financial stability of pension systems. More profound changes in the pension systems of European Union member states are inevitable - the pension systems need to be strengthened through broader fiscal reforms, social activation, and increased trust in the system. Research limitations/implications: The topic discussed in the article is very important in the contemporary context due to the financial deficit of social insurance. During the research, certain limitations were observed in access to information, both domestic and international, which could facilitate a more in-depth analysis of the presented issue. Practical implications: The practical consequence of balancing the pension system in Poland - as well as in other EU countries - would be the elimination of the enormous subsidies from the state budget to institutions paying out benefits. Social implications: A country that would not have to subsidize the institutions paying pension benefits could allocate those funds to other important social goals, such as education, public infrastructure, the healthcare system, and so on. Originality/value: By analyzing financing issues in two representative countries, Poland and Germany, identifying differences in their pension systems, and highlighting the main challenges they face, it is possible to better understand the different approaches to pension provision in Europe and their economic effects. (original abstract)