The Italian far-right government is facing a mounting backlash for targeted changes it wants to make to pension benefits and early retirement, abandoning, for now, plans to structurally reform the country’s pension system and expand its second pillar.
The government intends to change the conversion rate to calculate pension payouts, based on wages received in the last years of work (metodo retributivo), for employees with less than 15 years of contributions.
From next year, the conversion rate to calculate pension payouts falls, for example, from 0.36 to 0.50 for employees in the public sector, members of the Pension Fund for Local Government Employees (CPDEL), the pension fund for doctors (CPS) and the pension fund for nursery school and primary school teachers (CPI), according to the latest version of the budget law seen by IPE.
The government has this week introduced the budget law to the Senate, one branch of the Parliament, to start the approval process.
The union General Confederation of Labour (CGIL) has accused the government of worsening the situation for public employees, compared with the Fornero Law of 2011, named after the then-labour and welfare minister Elsa Fornero, cutting their pensions by up to €4,432 per year.
According to Teresa Lavanga, director of CIDA, the union representing managers in Italy’s private and public sectors, the cabinet’s pension policy obstructs early retirement.
The government intends to allow early retirement for people aged 62 years and with 41 years of contributions, so-called quota 103.
According to Claudio Pinna, partner and head of wealth Italy at Aon, the proposed budget law lays bare the impact of measures taken over the years, primarily quotas, on the pension system.
“It will be very difficult in the future to manage the introduction of requirements that effectively allow the early retirement of workers without imposing stringent limitations,” he said.
CIDA is also against the plan to increase pensions in line with inflation by 22%, instead of 32%, for higher benefits equalling 10 times the minimum payment by Istituto Nazionale della Previdenza Sociale (INPS), Italy’s National Institute for Social Security.
“We are talking about pension [benefits] of €3,500 net, covered by contributions paid over the years,” Lavanga said.
The unions and CIDA have held meetings with the government to reform the pension system, for example by supporting the second-pillar pension system (previdenza complementare).
Lavanga said she hadn’t seen CIDA’s reform proposals in the budget law, and the government had instead ”introduced more stringent requirements for women wanting to retire early” – the so-called opzione donna – at 61 instead of 60 years old.
It is necessary to develop the second-pillar pension system to cover the shortcomings of the first pillar, Pinna said, adding that measures leading to an increase in the amount of members in pension funds go in the right direction.