Abstract
Italy is one of the countries where an increasing life expectancy and a low fertility rate is putting under pressure the sustainability of the national pension system. The growth of the age dependency ratio is a process that started years ago and it has required several reforms of the pension system in the last 30 years. The origin of the Italian pension system dates back to the beginning of the twentieth century and it has evolved over time, extending its coverage and increasing its generosity. As in many other countries, the need to reform the system to guarantee its financial sustainability in the long term started to be evident from the end of the 1980s and the first big reform was introduced in 1995. From this point forward the original pure defined benefit system entered a transition phase where new contributors belong to a pure defined contribution system. The additional reforms gradually included even other categories in what is now essentially a pure contribution system for all the participants. This chapter describes the evolution of the Italian pension system, the main contents of the pension system reforms, the current status, and the possible future evolution of the system.
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Notes
- 1.
According to World Bank data, 23% of the population was in the 65 + years old age range (World Bank, 2020).
- 2.
- 3.
- 4.
Source: ISTAT (2020a, 2020b). http://dati.istat.it/Index.aspx?DataSetCode=DCCV_TAXDISOCCU1.
- 5.
Piedmont is an Italian region located in the Northwest of the country that hosted the capital of the “Kingdom of Sardinia”. This kingdom originally included Piedmont, Sardinia, and Liguria, and then expanded up to the inclusion of all the other regions that actually belong to Italy.
- 6.
In 1973 an amendment allowed women working in public entities to apply for retirement after 14 years, six months and one day if married with children. That option was referred to as the “baby pension” but was not available anymore from 1982 with the “Amato reform” of the pension system.
- 7.
Decreto legislativo n.124 (21 April 1993).
- 8.
“New workers” are considered those who never paid contributions before 1 January 1996.
- 9.
The adjustment for inflation for pensions between five to eight times the minimum pension amount was adjusted only for 30% of the inflation in 1999, 2000, and 2001.
- 10.
Roberto Maroni was Minister of Labor in the government of Prime Minister Silvio Berlusconi.
- 11.
The reform was promoted by Elsa Fornero, Minister of Labor in the government of Prime Minister Mario Monti.
- 12.
- 13.
In 2012 the poverty status for receiving a social check was if annual income was below 5,749.90 euro.
- 14.
The 63-years threshold was valid in 2012. From 1 January 2013 to 31 December 2015 the threshold increased by three months to account for changes in the life-expectancy of the Italian population.
- 15.
In case of “virtual contributions” those amounts do not count.
- 16.
Ferrovie dello Stato Italiane S.p.A.
- 17.
Poste Italiane S.p.A.
- 18.
Including the Catholic church and ministers of other religions.
- 19.
We assume that the worker did not have any period of unemployment, so each year passed represents an additional year of contribution.
- 20.
18% is the 2% a year multiplied by the nine years of the 1996–2011 period.
- 21.
Without the need of exact calculations, and following a rule of thumb approach, we can say that the amount equal to the 2% of the full income (100) should be triple (three times 2%, equal to 6%) if the percentage is applied to a third of the income (the contributions equal to 33% represent around a third of the total income).
- 22.
Law Decreto legge 28 gennaio 2019 n. 26.
- 23.
In the past, to cope with the long-germ effect of unemployment on the retirement age, the government granted some unemployed categories with “virtual contributions.” Those amounts were not paid into the system but were accounted as years of contribution.
- 24.
https://quifinanza.it/pensioni/video/pensione-quota-100-quanto-si-perde/412223/ (last access 4 September 2020).
- 25.
Decreto legislativo n.124 (21 April 1993).
- 26.
For new workers there is the chance of an automatic enrollment if the worker does not communicate his/her decision to opt out within six months from being hired.
- 27.
The contribution to pension funds is not allowed for public employees.
- 28.
D.lgs. n. 252/2005.
- 29.
D.lgs. n. 252/2005, art. 13, c-bis.
- 30.
MEFOP (2020). Bollettino statistico 76. (Available at https://www.mefop.it/cms/doc/23789/bollettinostatistico-76.pdf).
- 31.
5,393,965.
- 32.
3,791,320.
- 33.
Law 2 April 2015, n. 44.
- 34.
The death of the borrower is not the only cause of termination of the contract. The destruction of the house by fire or explosion are additional causes of termination, as well as the sale of the property by the owner to a third party. Another cause of early termination is intentional action by the owner-borrower in order to reduce the value of the property (e.g., intentional damage to the house, arson, etc.).
- 35.
- 36.
- 37.
In 2020 the anticipation is equal to 100% of the expected income on 2020. That amount has to be paid in two tranches: one in the spring, one in the autumn.
- 38.
Social Pensions (Pensioni sociali) were introduced in 1969 and are granted to every Italian citizen which income is below a certain threshold, regardless of the presence or the amount of contributions.
- 39.
OECD (2021), General government debt (indicator). https://doi.org/10.1787/a0528 cc2-en (Accessed on 23 April 2021).
- 40.
- 41.
Source: https://www.prestitovitalizioipotecario.eu/ (Last accessed April 2021).
- 42.
Source: https://www.prestitovitalizioipotecario.eu/ (Last accessed April 2021).
- 43.
Source: https://www.prestitovitalizioipotecario.eu/ (Last accessed April 2021).
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Nicolini, G. (2022). The Italian Pension System. In: Lee, H., Nicolini, G., Cho, M. (eds) International Comparison of Pension Systems. Contributions to Management Science. Springer, Singapore. https://doi.org/10.1007/978-981-19-6446-6_4
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