ITALY – Recent discussions between the Italian government and Italy’s main unions about reforming the country’s pensions system have resulted in deadlock.

The government believes the central issue in the pensions debate is the retirement age and demographics. The governments wants to raise the retirement age to keep people in work longer as well as encourage them to take out private plans.

But the 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.

A spokesman for IAMA Consulting in Milan says it all comes down to relieving the burden on the state pay-as-you-go-system (PAYG), which accounts for some 15% of Italy’s annual GDP.

“Reforms to the second pillar market has seen a wave of new company and sector-wide pension funds being established. The unions believe these will supplement the existing PAYG schemes sufficiently so that the retirement age can be left alone.

"The government disagrees and feels extending the retirement age is the first step in dealing with the problems demographic changes will bring,” he says.

Fresh talks are due in October after the summer break but IAMA’s spokesman is not optimistic that an agreement can be reached.

“The deadlock is unlikely to be resolved to everyone’s liking and continuous stalling isn’t getting us anywhere.”