Matteo Salvini's League engages with a pension reform which, in his opinion, would be "revolutionary". In fact, if by revolution we mean to blow up the system and condemn the elderly to poverty, the proposals of the Carroccio - as far as we can understand from reading the newspapers that talk about them - are really spot on. Beyond the promised amounts (it would be necessary to explain to Salvini and his economists that promising a pension of one thousand euros to new recruits today means not taking into account the fact that, in 40 years, that sum would be negligible at the current value of the currency) , the mechanism should work like this: employers pay a fixed contribution for each of their employees (who have a 10% payroll withholding tax) regardless of the salary received; the contribution bracket only serves to determine the amount of the allowance (in fixed brackets of 500, 800 and 1.000 euros per month for 14 months) in relation to length of service (35 or 40 years). The model (there would be quantitative differences for self-employed workers but with a mechanism similar to that of employees) should only apply to new hires and to those who, under certain conditions, opt for it.
And here the most serious problem arises, to which no answer is given. The large public pension systems - this is the first fundamental notion to learn and keep in mind - work with the so-called distribution method whereby current pensions are financed by contributions paid by workers active in the same period, on the basis of a pact between the generations, imposed and guaranteed by the State. This pact promises today's taxpayers that, tomorrow, when they become retired, there will be another generation of taxpayers who will honor the promises received in exchange for fulfilling their duties. If then the promises rise to the Elysium of rights, that's a whole other matter.
It is good to do this reasoning immediately and immediately put the cards on the table. In the dominant statist culture there is an excessive trust in laws, as if the rules were enough to produce the resources needed to pay pensions. In reality, the balance of the intergenerational pact underlying large public systems strictly depends on parameters that the laws cannot determine, while they are radically conditioned by them. Each variation of these parameters produces effects – more or less profound and structural – which affect the possibility of considering social security rights definitively acquired (that is, of translating promises into enforceable prerogatives).
