Italian pension reform only half done
A top pensions academic, CERP’s Elsa Fornero, has called Italy’s plans on pensions “only half a reform”.
“For people of our generation, expectations for state pensions are greater than on private pensions because everything is still being created,” said Elsa Fornero, director of the Center for Research on Pensions and Welfare Policies (CERP).
But such expectations would put pressure on younger generations, she argued, saying: “We will receive more than we deserve, while the younger ones will get less.”
Fornero, who is professor of economics at the University of Turin, was speaking at a conference in Milan organised by the European Institute of Public Administration.
Italy had been caught up by the ageing time-bomb in 1992, when the pension system “was close to collapse”, triggering the Amato reform, followed by the Dini and Prodi reforms in 1995 and 1997 Fornero says.
The results in “the very long run” would be actuarial fairness, but so far the legislation on pension funds has been “relatively ineffective”.
The ‘silent assent principle’, one of the features of the new pension reform, prepared by Berlusconi’s government, was also criticised as ‘costly’.
Silent assent refers to the TFR or trattamento di fine lavoro, an indemnity paid to employees at the end of their career. Under the new laws, a part of it would be invested in second-pillar pension funds, unless the worker forbids it.
“Despite much effort, the Italian pension reform remains unfinished,” she argued.
The good objectives of the current government’s reform such as increase retirement age, promote the development of supplementary pensions and reduce expenditure “have been almost lost in the two years of stand-by in Parliament”, she says.