ITALY – The Italian government has delayed the implementation of the TFR, or severance pay, reform until 2008 – two years later than planned.

“The reform with regard to retirement indemnities will enter into force contextually with the ‘first pillar’ establishing the increase of pensionable age from 57 to 60 from 2008,” reported government news service AGI.

The TFR, or 'trattamento di fine rapporto', is expected to provide a boost to pensions by encouraging workers to invest the severance pay they receive upon retirement in pension funds.

Unions said the government had put the interests of insurers ahead of the population. Welfare minister Roberto Maroni rejected this, saying: “I do not accept this behaviour or tone because we have managed to get a reform though that we've waited ten years for, protecting the union's requests."

"It answers the needs of the business world. It's an important reform that goes in the right direction," said Luca di Montezemolo, head of business association Confindustria.

According to some estimates the reform will bring some €14bn into pensions – with many market players readying themselves for the move.