Italy’s far-right party The League (La Lega) has proposed channelling severance pay (Trattamento di Fine Rapporto, TFR) to pension funds to boost the amount of monthly pension received, necessary to retire early.
Claudio Durigon, undersecretary for the Ministry of Labour and Social Policies, and member of Parliament (MP) for The League, said in an interview that one option sees a 25% share of the severance pay flowing to pension funds.
“We want to discuss this with unions and firms, starting from a low quota, such as 25%, because we are aware that severance pay is also a source of liquidity for small businesses,” he added.
The measure would increase the total amount of contributions paid into the mandatory and complementary pension schemes to retire three years earlier than the statutory retirement age.
According to Durigon, supplementary pensions can be added to the amount resulting from contributions paid in the public pension system to reach a €1,500 monthly pension, which is three times a social allowance paid to low earners, a requirement necessary to leave work at 64.
This will apply to those in the so-called contributory system (‘sistema contributivo’), where pension payouts result from contributions, as opposed to a system where the amount of pension is based on the salary received in the last years of work (‘sistema retributivo’).
Currently, the TFR is either paid to the Istituto Nazionale di Previdenza Sociale (INPS), the main entity of the country’s public retirement system, or is held in companies.
Italy’s biggest union – General Confederation of Labour (CGIL) – has shown resistance to The League’s plan.
“This proposal has never been discussed with the social partners, it cannot be considered a solution to a more general problem concerning the younger generations. We must keep in mind that severance pay is an element of remuneration”, said Ezio Cigna, head of social security at the CGIL in an interview with La Stampa newspaper.
The three main Italian unions – CGIL, the Workers’ Trade Unions Confederation CISL and the Labour Union – agree that it is necessary to invest more in complementary pensions, but this approach might not benefit everyone, especially those whose employment relationships are unstable.
The CGIL backs a so-called “guarantee contributory pension”, that would be paid to those who have started paying contributions since 1996, when Italy switched to the contributory system, combining contributions and retirement age.
“The amount of the guarantee pension would grow with contributions and age, encouraging the payment of contributions and the postponement of retirement,” said Cigna.
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