ITALY – European Union finance ministers have advised Italy to pass new measures to cut pension spending in order to control public expenditure.
The council of finance ministers (Ecofin) says that as a result of overspending, and pressures on public finances as a result of an ageing population, Italy will now have to maintain surpluses of 5% of gross domestic product .
Italy’s ability to cope with the budgetary consequences of ageing is “based on implementation of the major pension reforms adopted in the 1990s, and a large increase in the participation rate,” but more must be done, says the council.
Ministers encouraged Italy “to adopt further measure to promote supplementary privately-funded pension schemes, and to address the outstanding critical issue in the public pension system, namely, the long transition period to the new contributions-based system”.
“This should be coupled with the measure necessary to raise participation rates and to control the evolution of age-related expenditures,” added the council.