Abstract
After a period of profound changes undertaken at a structural level, the Italian pension system is now facing the new challenge of sustainability posed by the demographic changes to be experienced by its population in the future. This chapter argues the integration between the public and private sector is of prominent importance to ensure a decent standard of living at retirement for the whole population in the future. By performing a parallel analysis of the actual pension system and the housing and credit market, this chapter also emphasizes the potentials for developing pension schemes based on individuals’ own residence. At the same time, it also shines light on some of the barriers that may be encountered in the development of this process.
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Notes
- 1.
The contributive capital is calculated re-evaluating the contributions of each worker (33% of the yearly salary, of which about one third is paid by the employee and two-thirds by the employer) at a rate equal to the moving average on a 5-year horizon of the nominal GDP growth rate. A transformation coefficient is then applied in order to account for life expectancy at the moment of retirement, the probabilities of leaving a widow or widower behind and the expected duration of years that a survivor’s benefit will be withdrawn. Lastly, an indexation to inflation rule is applied, which decreases with the amount of the pension. The net replacement rate results to be increasing with the retirement age, lower for those with wage patterns growing faster than the GDP (OECD 2015).
- 2.
The TFR is a benefit supplied in form of a lump sum equal to the severance pay provision of 1-month salary each year and with an annual return of 1.5%, which is increased by 75% of the inflation rate. The TFR remains in the employer company up to the retirement moment. Starting from 2007, however, there have been introduced incentives to shift the new TFR to the supplementary sector.
- 3.
These data do not include the sector of private pension institutions which are in charge of supplying mandatory pensions to self-employed workers.
- 4.
For this reason, we describe the details of these funds here rather than in the next section.
- 5.
‘Old autonomous contractual pension funds’ are the only private pension plans that can be characterized by definite-benefit schemes.
- 6.
Improvements in housing transactions continued according to the most recent data in 2015. According to OMI (2016) housing transactions increased by 6.5% between 2014 and 2015. Also house prices continued to decrease, although to a lower extent, by 2.4% between 2014 and 2015.
- 7.
This section largely draws on Jappelli et al. (2014).
- 8.
This section largely draws on EMF (2016).
- 9.
This section draws on IMF (2013).
- 10.
See IMF (2013).
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Murro, P., Palmisano, F. (2018). Italy: An Ageing Country with Low Level of Private Pension Schemes but High Homeownership Rate. In: Eckardt, M., Dötsch, J., Okruch, S. (eds) Old-Age Provision and Homeownership – Fiscal Incentives and Other Public Policy Options. Springer, Cham. https://doi.org/10.1007/978-3-319-75211-2_6
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