Not only young brains: retirees are also fleeing Italy. In recent years, an increasing number of ex-workers has decided to move to countries where the cost of living is lower and the tax burden has a lower impact on pensions. According to INPS data, there were 16.420 expatriate retirees in the last five years, of which 5.345 in 2014 alone. The annual number of retirees leaving Italy more than doubled from 2010 to 2014, with a sharp acceleration in the last year ( +65%).
INPS disburses around 400 pensions a year abroad, for a total amount of over one billion euros, in more than one hundred and fifty countries. The phenomenon "has economic and social repercussions: the payment of a pension abroad represents an economic loss for Italy as the amount disbursed does not come under the form of consumption or investment and generates a lower volume of taxes", explained the social security institution. Among other things, in countries that have signed an agreement on tax matters with Italy, pensions are paid gross and, to avoid "double taxation", withholding taxes are applied only in the countries of residence. This means, for our country, a lower collection in terms of indirect taxes.
However, the phenomenon does not only concern Italian pensioners, but also foreign workers who, after having obtained the right to a pension in Italy, decide to return to their native country, or to move elsewhere. In particular, 71% of retirees who emigrated in the last five years moved to other European countries, 10% to North America and 6% to South America. Comparing 2014 to 2010, the greatest percentage increases are recorded in Oceania (+257%), Africa (+164%) and Central America (+114%). Considering the pensioners of private and public management who emigrated from Italy from 2010 to 2014, the amount of the pensions paid to them amounts to 300.650.009 euros.
BOERI: 3 BILLION IN THE CASH FROM IMMIGRANTS RETURNING ABROAD
On these bases, the president of INPS, Tito Boeri, has proposed creating a fund for immigrant integration policies fed by the 3 billion euros of INPS contributions (capitalized with the contribution rules) of foreigners born before 1949 who do not they received the pension or the refund of the de-contribution because they returned to their countries of origin without having met the minimum requirements.
It's called 'social free riding' and it is the phenomenon of immigrants who, after having worked and paid contributions in Italy, return to their country of origin without having (or without being able to) have their pensions paid by INPS. 'Social free riding' in Italy, for those born before 1949, concerns 198.430 foreigners out of 927.448, therefore with a percentage of 21%, but the phenomenon is growing, even if seniority is no longer required for new members since 1996 minimum contribution to access the old-age pension at 66 years of age (plus the months of adjustment to life expectancy).
But another 3 billion could be added to the 12 billion already acquired in the future, because the generations of immigrants from 1949 to 1981 (who have not yet accrued old-age requirements) have 4,2 million contribution positions open before 96 (therefore subject to the minimum contribution requirements), which have disbursed contributions for over 56 billion. By applying a percentage of 21% who will not get a pension, "we already have around 12 billion in contributions today that will not give rise to pensions".
The report also highlights another ever-growing phenomenon, that of the flight of Italian pensioners who emigrate and have their (gross) pensions paid abroad. From 2013 to 2014 there were a total of 36.578 people and in 2014 there was a boom with a 65% growth in retired emigrants. “The flight of pensioners – underlined Boeri – is a phenomenon that worries us because it erodes the tax base, because many pensioners obtain exemption from direct taxation and do not consume in Italy (with effects also on indirect taxation)”.
Furthermore, the flight of pensioners abroad is not compensated by the inflow of INPS pensioners who return (24.857 from 2003 to 2014). Hence Boeri's second proposal: "Why not invest in services for the elderly, in order to reduce the flight of pensioners and attract pensioners from abroad?".
Finally, the INPS report points out that "Italy is one of the few countries to recognize the extra-EU portability of the non-contributory part of pensions". We thus pay minimum subsidies and social increases to people who live and pay taxes elsewhere, reducing the cost of social assistance in these countries, while in Italy we do not have a basic social assistance network for those who live and pay taxes in Italy . Boeri's third and final proposal is therefore to “stop paying non-contributory benefits abroad”. Boeri, clarifying that he has not yet discussed it with the Government, underlines that these are three proposals that "deserve reflection".
