In recent years, Italy has implemented a pension reform, increasing the state pension age in order to improve the system’s sustainability.
Under the current rules, from 1 January 2019, the retirement age is 67. In addition, in order to access their pension, employees must have paid social security contributions for a period of 20 years (‘old-age pension’).
Regardless of age, all workers who have paid social security contributions for a certain number of years can access their pensions. Currently, men must pay social security contributions for a minimum of 42 years and ten months, while for women the minimum period is 41 years and ten months (‘early retirement’).
Of course, these measures have given rise to problems for employees, especially for middle-aged employees who have lost their jobs while still far from the state retirement age.
The Italian Budget Act 2019 has provided for the allocation of public funds for the introduction of pension measures aimed at increasing the flexibility of the system. To this end, Decree No. 4, published on 28 January 2019, introduced various experimental possibilities for early retirement for certain categories of employees and on certain conditions.
Some measures apply to individuals and can be requested by employees who meet the conditions set out by the law.
This measure allows employees to retire if they are 62 or older and have paid social security contributions for a minimum of 38 years. Therefore, this would allow such employees to retire and access the state pension five years earlier than allowed under the ordinary rule (with respect to the old-age pension). This experimental option will remain in force for a period of three years (2019-2021).
This special measure has been introduced for female workers who are 58 or older, if they are employees, and 59 or older if they are self-employed, and who have paid social security contributions for at least 35 years. In this case, retirement will be available eight or nine years earlier than under the ordinary rule (with respect to the old-age pension).
in 2019, a specific category of employees in situations of particular need (e.g. those with disabilities or those who have to care for relatives with disabilities) could potentially receive an allowance from the State for the period of unemployment preceding retirement age. Access to this measure is available for employees who are at least 63 years of age and have made 30 years (or 36 years in certain cases) of social security contributions.
A ‘collective’ measure has also been provided for by the new Decree, which is aimed at allowing for generational turnover within companies. Specifically, Funds established in certain sectors (e.g. banks, insurance etc.) can pay an allowance to employees who qualify for ‘Quota 100’ early retirement by 31 December 2021.
This measure, which is financed by employers, is only available if the employer has signed a union agreement at company or local level that provides for the hiring of new employees to replace retiring ones.
The hope is that this increased flexibility and the new measures for management of an ageing workforce could ease the redundancy process and encourage companies to hire young employees, particularly considering that the Italian Budget Act provides for incentives for companies to do so.