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Italy considers changing state pension system

ITALY- Disincentives for employees to retire before the age of 65 are being considered in an attempt by the Italian government to keep people in work longer and to encourage them to take out private plans.

Currently in Italy it is possible to claim a state pension at 57 years of age as long as a minimum of 35 years have been worked.

At the first meeting since the summer recess last Friday, the government discussed the effects that Italy’s ageing society will have on state pensions. The Italian government calculates that by 2025 pensioners will outnumber workers. The dependency ratio currently stands around 1.2:1.

Two options are currently under discussion: to increase the minimum age of retirement from 57 to not more than 65 years of age; or to penalise those who retire before the age of 60. Roberto Maroni, minister for welfare, labour and social policy has already expressed his disapproval of the penalty system.

Unions are opposed to raising the retirement age and instead would like to see the government introduce generous tax-breaks in the third pillar market. It is believed that the new company and sector-wide pension funds will supplement the existing pay-as-you-go schemes sufficiently so that the retirement age can be left alone.

The economy minister may add any pensions reforms to the 2003 budget this autumn.




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