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Retirement

Italy - Retirement


Italy is known to have had one of the most generous public pension systems that allowed employees to retire from the workforce relatively early. However, such benefits became increasingly unsustainable and could only be supported by increased contributions, which are already the highest in Europe. From 1995 the government began introducing pension reforms to reduce legally required benefits. The economic recession of the past decade simply helped to hasten the process as the country was faced with an unsustainable budget deficit.

In accordance with the reforms, the conditions of entitlement that grant employees early retirement benefits have been tightened making it a lot harder for an employee to retire early and avail of seniority pension. The age for seniority pension which was once set at 57 witnessed a rise to 66 years. This age of retirement is only applicable to men, but it is being progressively raised for women as well.

Italy’s state pension or public pension system is described as the first pillar system. This is easy to understand the country’s pension system depends primarily on the public pension system. Employees in Italy have long enjoyed great benefits and early retirement ages, but there have been a lot of changes to the Italian pension and retirement laws in recent decades. A public pension system is no different to social welfare programs like unemployment benefits, and like other social welfare systems of the state, public pension too has been funded by tax payers. Italy has had one of the highest taxation rates in world, a fact that made sustaining benefits by raising taxes further undesirable. Despite the significant cutbacks the public option remains the most widely relied on system of pension

Private pension plans and occupational schemes have been encouraged but still cover just a small fraction of the population. Only about a quarter of Italy’s population has coverage from company-based pensions or private pensions, with over 72 percent continuing to rely on the government for their retirement income. Company pension schemes or pension funds, as they are commonly called, were developed primarily in the banking sector some decades ago. Reforms that have been introduced from the 1990s to the early 2000s should bring about a rise in private plans and company schemes. Pension funds have been encouraged through tax advantages that were offered through the reforms.

Despite these measures to reduce dependence on the overburdened public system the number of employees with private pension plans was still low in 2010, with just 22 percent having private pension plans. Keep in mind that under pension laws in Italy all pension funds are required to have an agreement with an external investment manager. This external investment manager must be a registered asset management company, an insurance company or a bank. Pension funds also operate solely on a defined contribution basis. Defined benefit plans on the other hand are only restricted to pre-existing funds.

Italy is in some ways the embodiment of European culture and it’s not surprising that retirees from all over the world choose to settle here. Apart from the rich culture and history in its towns and cities, Italy also boasts some of the best art and entertainment in the world. Many are also captivated by the tranquil rural beauty of southern Italy. The pleasant climate and weather and healthy Mediterranean cuisine also make it a great place to spend your days as retiree. Health care is a big concern for anyone past sixty and it should be pointed out that Italy’s health care system is rated as being among the best in the world.

Expats from outside of the European Union will need a visa to enter Italy, which can be procured from an Italian Embassy in the country you reside in. Anyone wishing to retire in Italy will need to show proof that he/she has the funds to support basic living requirements. This could include not just savings and other assets but could also include your pension. Once you arrive in Italy make sure to drop in to the nearest police headquarters to register your presence. This needs to be done within eight days of your arrival in the country. In addition, you also need to apply for a residence permit.

Your residence permit is your most important piece of documentation as it is needed for all administrative procedures, whether you wish to open an account with a bank or buy a vehicle. The can be procured from the local town hall and is issued by the Anagrafe (Registry Office).


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