The European Commission has rebuked the far-right government in Italy for its plan on early retirement for next year, saying that it is not in line with recommendations on reforms that would relieve public spending.

In its response to the Draft Budgetary Plan proposed by the Italian government, published yesterday, the Commission underlined that the extension of early retirement schemes in 2023, that were set to expire at the end of the year, is one of the measures “not consistent with past country-specific recommendations” set out by the European Council in 2019.

According to the Draft Budgetary Plan, temporary measures, including the extension, although under stricter age criteria, of early retirement schemes would lead to an increase in the deficit of 0.7% of GDP, the Commission said.

The government is planning to introduce the so-called quota 103 next year, allowing people to retire at 62 with 41 years of contributions, but with a cap on benefits.

It also intents to extend for next year the ‘Opzione Donna’, allowing women to retire early calculating pensions based on contributions, but giving women with two children or more the option to retire at 58, at 59 for women with one child, and at 60 in other cases.

It is not clear in detail how the Italian government will finance the transitory measures, the Commission said in its response, adding however that based on the draft budget law submitted to the Parliament on 1 December, the cabinet plans a lower indexation mechanism for pensions exceeding four times the minimum pension benefit.

The government is proposing for the period 2023-2024 full indexation for pension benefits equal to or less than four times the minimum benefits paid by Istituto Nazionale di Previdenza Sociale (INPS), taking into account the total amount of benefits, 80% for pension benefits equal to or less than five times the minimum paid by INPS.

It is proposing a 55% indexation for pensions totaling more than five times, and equal to or less than six times the minimum paid by INPS, and 50% for pensions benefits higher than six times the minimum, and equal to or less than eight times the minimum paid by INPS, according to the budget law submitted to parliament.

The EU Council had recommended Italy pursue a prudent fiscal policy, beyond 2023 gradually cutting debt, but targeting investments and reforms.

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