Italy’s TFR delayed for six months
ITALY – The Italian government has announced that the start of one of the key aspects of the pension reform, the so-called Tfr, will be postponed by six months.
The trattamento di fine rapporto is a severance payment which could boost the second-pillar when injected into pension funds.
Once operational, this aspect of the reform could divert billions of euros to the second pillar. The welfare ministry said yesterday that the six-month Tfr probation period would now start on January 1 2006, instead of July this year as originally planned.
Welfare minister Roberto Maroni, one of the architects of reforms passed by parliament last July, made the announcement following a meeting with the social partners, including the trade unions and the employers’ association Confindustria.
There is a six-month grace period before the payment is put into pensions unless the worker objects. This probation period should have started next month, making the system payment operational in January 2006.
Protracted negotiations with the social partners, whose assent is necessary, have been partly behind the delay.
Last winter the unions asked for protection for workers’ investments within especially set-up pension schemes.
Another reason for the delay has been the lack of clarity over what authority will supervise the new pension industry.
The reform appointed the current pension regulator Covip, but the law clashed with a bill currently discussed at the senate that gives market regulator Consob the supervision of insurance, which is also a pension saving-option. Maroni said he has presented an amendment to the bill in favour of Covip.
“The issue is not the delay in terms of months,” said Adriano Musi, national secretary for pensions with trade union Uil.
He told IPE: “I can live with this delay if it means getting started with the right foot.”
Musi said the setting up of pension funds is 10 years overdue. “There will be workers who started after 1995 who will have public pensions worth about 50% of their wages and these people had no access to pension saving solutions for years. This is a great injustice.”
The Tfr decree is expected to be approved by both the cabinet and social partners by October 6.