The Italian lawyers’ pension fund, Cassa Forense – the country’s second largest – has decided from 2024 to overhaul its pension offering based on the amount of old-age provisions calculated exclusively on members’ contributions.
For the new members the pension fund will add a supplement of one percentage point of the amount of contributions paid in order to calculate benefits.
The pension fund will apply a “mixed” system to calculate the benefits for lawyers that have been members for less than 18 years, as of 31 December 2023, based on wages paid for the years prior to the reform coming into force, and on contributions for following years, it said.
For members enroled for at least 18 years, as of 31 December 2023, the system based on remunerations will continue to apply, but with a different coefficient of return (coefficiente di rendimento) used to calculate pension pay-outs, that will fall from 1.40% to 1.30%, only for the years following the reform coming into force, it added.
The rate used to calculate the contribution of each member will be gradually raised by two points, 16% from 2024 and 17% from 2026, while the minimum contribution will decrease from the current €3,000 to €2,200, the pension fund said.
During the first phase of the enrolment in the pension fund, the first four years, member contributions will be directly linked to income, and the pension fund will not require a minimum contribution.
From the fifth to the eighth year of enrolment, instead, the minimum contribution for each member will be cut by 50% to €1,100. Members can top up that minimum contribution on a voluntary basis within the first 12 years of enrolment.
The rate of contributions under the new plan is increased from 7.5% to 10% for retirees who continue to work after reaching retirement age. Retirees who continue to work will receive periodic pension increases linked to pension supplements that take into account the share of contributions paid, Cassa Forense said.
The scheme said this reform was “a necessary step” responding to the projection concluded by a 30-year actuarial technical report, foreseeing that in the long-term problems of financial sustainability with the system might arise, mainly linked to changes in demographics within the profession, Valter Militi, the fund’s president, wrote in a letter explaining the reasons for the changes.
Changes to the pension plan are in line with the broader reform of the Italian pension system, transitioning from the so-called ‘modello retributivo’, where the amount of pension is based on wages received in the last years of work (defined benefit), to the ‘modello contributivo’, where benefits are calculated on contributions (defined contribution).
The structural reform of the pension plan provision at Cassa Forense is being introduced after a two-year research study conducted by a commission that paid particular attention to ‘vested rights’ and ‘expectations’, Militi said explaining the reform.
The refreshed plan will be sent to responsible authorities for approval together with the actuarial technical report, he added.
According to the financial statement for 2021, the number of members enroled in Cassa Forense decreased from 245,300 in 2020 to 241,830 last year.
The data showed that in the years prior to 2021 the number of members had stabilised, and the contraction in the last year was caused by a high number of members exiting the pension fund, rather than a contraction in the number of new registrations, the statement explained.
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