Italy is a nation of poets, artists, heroes, saints, thinkers, scientists, navigators, and emigrants. All (or almost all) become forgetful when it comes to pensions, as they get indignant every time someone recalls aspects of the work pension already known for decades and repeated many times by many "desert preachers".
In recent days a Relationship curated and presented by Censis and Confcooperative he told the Italians that the replacement rates (i.e. the ratio between the first pension and the last salary) now (and for years) at full capacity (i.e. at 67 years of age and 38 years of seniority) is equal to 81,5%, while in 2060 it will be 64,8%.
Young people and generations under pressure
At this dire news the usual mourners burst into crocodile tears at the thought of the fate of those new generations whose grandparents and fathers have stolen their future by robbing them of snacks since nursery school. To ensure they don't miss anything, the old story has resurfaced. low wages, as if this were the main reason for the decline in the replacement rate.
That this would be the outcome was not only foreseen, but planned at the time of the 1995 Dini/Treu reform, which Parliament had passed under the dictation of the then "dazzling" unions, fresh from the defeat of the first Berlusconi government. It was already emphasized then that, to preserve the initial replacement rate (with the requirements of 60 years of age and 35 years of contributions), the support of a complementary treatment to be ensured with a payment of at least 10% of the salary (hence the choice of the severance pay as the main source of financing, with the addition of contributions from employers and workers).
Replacement rate at retirement (initial pension/last income)
| Private worker aged 60 and with 35 years of contributions (%) | 2000 | 2010 | 2020 | 2030 | 2040 | 2050 |
| Public pension (mandatory) | 67,3 | 67,1 | 56,0 | 49,6 | 48,5 | 48,1 |
| Private pension | 0,0 | 4,7 | 9,4 | 14,5 | 16,7 | 16,7 |
| Total | 67,3 | 71,8 | 65,4 | 64,1 | 65,2 | 64,8 |
Protection of "historical" workers and the impact of the Fornero reform
Indeed, it was then believed that workers who had been registered in the compulsory system for more than 18 years should be protected, and they were safeguarded in pay system (then in 2012 the Fornero reform also moved these cohorts to the mixed system). The reason given was the following: young people can remedy this by resorting to complementary pension, while adults are tied for life to the mandatory pension.
Thirty years later, we've noticed that the majority of private pension plan users are mature male workers, employed in medium- and large-sized companies, and unionized. Essentially, the way the system is structured job market, also funds board they went to the rescue of the usual suspects.
The following table shows how many years were given away by the system under the different calculation regimes before the Fornero reform.
| Management | Residual life until retirement | 1970-2005 salary calculation | Difference from residual life | 1980-2015 mixed calculus | Difference from residual life |
| Ministerial | 25,3 | 14,9 | -10,4 | 16,6 | -8,7 |
| the Local Societies | 25,3 | 15,4 | -9,9 | 17,2 | -8,1 |
| private employees | 25,3 | 17,3 | -8,0 | 19,5 | -5,8 |
| artisans | 25,3 | 5,5 | -19,8 | 11,4 | -13,9 |
| Merchants | 25,3 | 5,6 | -19,7 | 11,6 | -13,7 |
Generational inequalities in social security and the labor market
To explain it gap in replacement rates Regulatory differences, or rather the reward effect associated with the salary calculation, are not enough. The real reason concerns the different presence of workers in the labor market. baby boomers and of today's and tomorrow's generations.
The former belonged to large cohorts (1,1 million born in 1964), who entered the labor market early and remained there for a long time and continuously, so much so that they could retire at an average retirement age of less than 62 and benefit from the free extension of life expectancy. Many of the baby boomers who have retired or are retiring remain there for a period of time equal to 80% of the time spent working. And according to the OECD, in Italy the average pension è higher than the average wage.
All this comes at the expense of generations of workers whose numbers are decimated (unable to replace those leaving) and characterized by late and interrupted employment. As for the low wages, it's clear that there's a perverse relationship with pensions.
Wages, tax wedge, and the sustainability of the Italian pension system
Italy climbs the rankings that see it at the bottom for salaries and places itself in second place, after France, due to the size of the tax and social security wedge (the difference between labor costs and net wages). Pensions contribute a significant amount, with a rate of 33% (another record), compared to an average rate of 18% in OECD countries.
There are other aspects of the salary issue that should be listed: the difference with other countries concerns the medium-high wages, because only 9% of our households earn more than 40 euros a year. Family income has increased, driven by increased employment. Thanks to tax and social security measures and transfers, incomes up to 35 euros have fully recovered. tax drag due to the surge in inflation determined, between 2022 and 2023, by serious successive events (pandemic, wars, energy crisis) that were not predictable due to their exceptionality compared to trends consolidated for decades. contract renewals are undergoing a slow but steady recovery with increases exceeding inflation. The spread of corporate welfare it's not free.
The future of the system and the rules to be respected
The Censis/Confcooperative report states that between 2025 and 2050, the working-age population (15-64 years) will decline by 7,7 million, equivalent to a 20,5% contraction. This decline in the working-age population will be accompanied by an exodus of baby boomers, with several million additional pension payments, which will push spending to a peak of 17,3% of GDP in 2036, before declining and stabilizing at around 13,7% in 2070, when the contributory system will be fully implemented.
But to ensure that this already unflattering path does not lead to a leap in the dark, there is a necessary, though not sufficient, condition: the correct operation of the biennial indexation. of the age and contribution requirements for access to pension compared to increases in life expectancy, a rule that the political and trade union left is calling for to be abolished, in unison with a section of the governing majority (the League), and which does not see the rest of the majority ready to defend this rule at all costs to guarantee a sustainable imbalance.
