Reforms usually follow general elections, regardless of the political system. Italy is no different. The most generous country in Europe in terms of pension payments, according to the Organisation for Economic Co-operation and Development (OECD), Italy spends the equivalent of 15.6% of GDP on pensions.

Giorgia Meloni, Italy’s new prime minister, has promised to protect this lavish pension system, but that means having enough people of working age.

The country’s plan for pensions reform looks like a labyrinth of ‘quotas’ – from quota 100 to quota 102, a quota 103 and quota 41 – that can make any future retiree’s mind spin. For the next few years, all these systems will be able to continue, until the government has completed and approved the reform that should definitively establish the quota 41 system – a hybrid approach that provides for early retirement at 62 with 41 years of contributions. 

All this, to prevent the ‘Fornero law’ from coming back into force from January 2023, when quota 102, which was introduced by the former Mario Draghi government, expires.

The so-called Fornero reform was introduced in December 2011 as one of the main elements of the ‘Save Italy’ reform package. After the financial crisis of 2008 and the subsequent debt crisis of 2010, in Italy, as in many other countries, there was the need to reduce public spending. The retirement age was increased to 66 for both men and women in the public sector with a minimum of 20 years’ contributions and a new pension calculation system for all workers was introduced.

As the expiration of quota 102 fast approaches, the government has envisaged a ‘bridge’ solution to prevent the Fornero law from being fully enforced as of January 2023. This will be in the form of quota 41.

From 2024 the roadmap drafted by the government provides for the launch of a comprehensive reform of social security: to establish quota 41 to overcome the system of rigid quotas linked to age.

Italy has one of the world’s oldest populations and lowest birth and employment rates, meaning there are not enough workers to support a growing pensioner population. This dilemma could easily be addressed with a softer immigration policy, but that is the very opposite of Meloni’s core political message.

Venilia Amorim, Editor, IPE.com
venilia.amorim@ipe.com

Venilia is editor of IPE.com. She joined the IPE editorial team in November 2019 after freelancing for FT Adviser and LAPF Investments, while also being a publisher for market intelligence company Clear Path Analysis. She started her career at Euromoney Institutional Investor where for 16 years was reporter and editor covering the asset management industry globally.View full Profile

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