ITALY – The European Union’s commissioner for monetary affairs, Pedro Solbes, says Italian pension reform is a step in the right direction, but it’s not enough.

Solbes told financial daily Il Sole 24 Ore in an interview that the reform was "a step in the right direction, but it's not enough". He told the paper that the reform "has an effect on the spending curve, but not on the total amount spent on pensions, which will stay the same at 14% of the GDP, a European record."

Prime minister Silvio Berlusconi has called for the retirement age to be raised by five years. And last month economy minister Giulio Tremonti said that the state pension system would explode unless the second pillar is not developed as soon as possible.

Pension reform is currently under discussion by Italian senators. According to the Italian government’s news service, the opposition is threatening not to participate in the senate budget committee if the government doesn't clarify its intentions on pension reforms.

Meanwhile, parliamentary relations minister Carlo Giovanardi has said that pensions reform "has no effect on 2004 payments."