Italian executives squeezed
A survey among major Italian groups and multinational groups operating in Italy has shown up the pensions plight of the newer generation of Italian executives.
The so called 'dirigenti' schemes to supplement the executives' INPDAI social insurance scheme are not attracting the same levels of contribution as in former times.
A survey undertaken by Adelaide Consultants, based in Milan and Rome, for IBM in Italy, among 27 top companies found that almost 90% of them contributed to their executives' supplementary pension plan, in place of the Previndai, the national fund for industrial dirigenti.
Those executives, who had been participants prior to 1993, are entitled to better fiscal advantages on contributions. The survey finds that for these older dirigenti with an annual salary of at least L150m ($85,000), 18 of the 27 companies pay more than the minimum amount required by their collective agreements, while for dirigenti on L300m, 21 of these companies are paying more than the minimum required," says Piero Marchettini of Adelaide. "Under the old pre -1993 system all contributions were tax deductible." Under the system since then, he points out that everything paid to the supplementary plans or the Previndai uses up the tax relief and that nothing above the statutory level of contribution is tax deductible. The survey finds that for those with L150m or indeed L350m salaries, only 11 companies are paying contributions over the minimum. "For that portion that is in excess of the tax deductible amount, the contribution effectively costs 60% more," says Marchettini.
The current situation is that the old-er dirigenti have better social security pensions, a higher statutory contribution level to their supplementary schemes and more generous company contributions, than their younger colleagues. "The two packages are not comparable."
Marchettini sees no solution but for the newer dirigenti to put all of their legal termination indemnity towards pension and to consider non-tax de-ductible contributions. He adds that employers should try to obtain better returns on their supplementary schemes, which the survey finds are two thirds in insurance contracts. Fennell Betson"