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Pension reforms in Italy: background summary

An overview of pension reforms in Italy since the ‘90s. Pensions are social security benefits that workers receive once having completed their career. According to the Italian pension system every worker, employee or self-employed in the public or private sector and registered with a social security institution must pay contributions on a regular basis. The contributions paid during his/her working life determine a monthly revenue according to the paid contributions, which financially supports the worker after retirement.

Characteristics of the Italian pension system

  • The Italian pension system is based on “contributions”, because the pension amount is calculated on the basis of social security contributions, paid by the worker during his/her working life. In a social security system of this type, the contributions paid by workers and companies to the social security institution (Istituto Nazionale della Previdenza Sociale, INPS) are used to pay the pensions of retired workers.
  • The contribution system has replaced the wage based system, that remained in force until 21 December 2011. In the wage based system the pension amount was calculated taking into account the average pay earned during the last years of work.
  • The current minimum requirement for the old-age pension laid down by the Labour Minister Fornero’s reform (Monti government) amounts to the payment of at least 20 years of contributions. With regard to the age of workers the requirements are as follows:
    • For workers in the public and private sector: 66 years of age;
    • A different pension age is required, however, for women: public sector workers must be over 66 years of age; employees registered with social security institutions or substitute social security measures must be aged over 62 years, (the age will progressively increase to 66 years in 2018); self-employed workers and workers registered with the special fund for self-employment must be at least 63 years and 6 months old, with a gradual increase until they reach 66 years in 2018.

In 2021, the age for old-age pension for men and women will be at least 67 years old.

  • Furthermore, starting from 1 January 2012, the seniority pension has been replaced by the early retirement pension. It is possible to access to early retirement with seniority contributions of 42 years and 1 month for men and 41 and 1 month for women, regardless of his/her age.

Pension reform in Italy

  • Starting from the ‘90s, the Italian pension system has undergone several structural reforms. Until the Amato Reform of 1992 the wage-based system prevailed: the worker received the pension according to the average salary he/she earned in the years before retirement, recalculated for each year of contribution.
  • Legislative decree no. 503 of 1992 – Amato Reform – raised the retirement age, whereas the recalculation percentage for each year of contribution was reduced (from 2% to 1%).
  • With law no. 335 of 1995, there was a shift from the wage-based system to the contribution system, considered less advantageous for workers.
  • With the enabling act no. 243 of 2004, implemented by decree no. 252 of 2005, the retirement age was raised and bonuses were introduced in favour of those workers who decided to postpone their retirement.
  • With law no. 102 of 2009 a new retirement age for public sector workers (65 years) was established.
  • During the Monti government (2011), a new amendment reformed the Italian pension system. Starting from 2012, the old-age and the early retirement pensions replaced all the previous retirement plans; the retirement age was raised to the same level for both men and women working in the private sector; it immediately ensured the transition from the wage-based system to the contribution system, even if the previous legislative modifications had provided for a gradual shift.
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