The Italian government plans to boost pension funds’ memberships on a voluntary basis, via contracts through the recent proposal to channel a share of severance payment to pension funds.
The cabinet intends to change the supervisory mechanism for complementary pensions to encourage uptake among employees, it said in a mid-term budget plan for the period 2025-2029.
It will work on “solutions aimed at strengthening the complementary pension pillar” to boost pension funds’ memberships “on a voluntary basis”, allocating the amount accrued as pension income, it added.
The government’s plan contrasts with the proposal of state secretary for the Ministry of Labour and Social Policy, Claudio Durigon, to pay 25% of the severance payment (Trattamento di Fine Rapporto, TFR) to pension funds, leading to an increase of future monthly pensions necessary to leave work at age 64.
“Here the [main] issue to me seems to discourage people from retiring early; [Durigon’s] proposal is in line with those who want to abolish the Fornero law, even if in reality it is fully implemented, even by this government,” Silvio Bencini, partner at European Investment Consulting, said.
The Fornero Law, or Law 92/2012, is an Italian pension reform that was named after the former labour and social policies minister, Elsa Fornero. The law changed the pension system from pay-as-you-go to a notional defined contribution (NDC) system and set up the retirement age at 67 with at least 20 years of contributions.
Pension funds and experts have raised doubts about the viability of Durigon’s proposal that would practically force workers to become members of pension funds.
The government’s mid-term budget plan looks at the sustainability of the pension system in Italy, with an ageing population and an historically low birthday rate.
The government is looking to extend working life, a necessity in almost all advanced countries for the sustainability of their social security systems, assessing the possibility of introducing incentives for staying in the job market, it added.
It is committed to ensuring an “active participation in the labour market, in line with demographic trends”, introducing changes to the criteria for access to retirement.
It also plans to review and overcome mandatory retirement for public employees through solutions extending the working life, and allowing public administration to retain skilled employees, it added.
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