Pensions: a new fund is being set up to finance early retirement

A fund of several hundred million to finance new, limited forms of early retirement, the details of which are to be finalised next year once the legislature’s final Budget Bill has been passed. This is the agreement reached last night at yet another summit of majority leaders in preparation for a budget bill which, in all likelihood, is expected to reach the Council of Ministers – rescheduled from today to tomorrow – late in the morning. Before the government meeting, further details will need to be finalised, starting with the procedures for applying the energy safeguard clause, on which negotiations with the European Union are continuing, with a certain degree of optimism on the part of the government.

The biggest obstacle, however, was domestic. Once again, it was the social security chapter that was standing in the way of the budget, with the League having imposed a veto last week (see *Il Sole 24 Ore* of 23 October): without measures on early retirement, as Lega leader Matteo Salvini had made clear, the party would not vote for the Budget Bill. The deadlock surrounding the League’s proposal on early retirement for 64-year-olds (with 36 years’ service, in a watered-down version of the old ‘Quota 100’ scheme) has been resolved, with decisions postponed until January: as in 2018, but with less money available, the budget will be limited to setting aside a fund of a few hundred million, to provide flexible retirement options for a few select groups.

However, another variable complicates the social security landscape. The budget’s social security framework also includes a new measure concerning the indexation of pensions. When inflation rises, the mechanism that links pension payments to price trends inevitably comes to the fore, as it drives up costs. Hence the speculation, confirmed by several sources, that a tiered approach to indexation will be reintroduced, with deeper cuts applied as the pension amount rises. The model is the one used in 2023–24, when full indexation was guaranteed only for pensions up to four times the minimum, whilst for higher amounts a ‘decalage’ was introduced, falling rapidly from 85 per cent for pensions between four and five times the minimum down to 32 per cent for the highest brackets.

At the time, with inflation soaring due to the war in Ukraine, the measure provided for funding of 2.1 billion in 2023 and 4 billion annually over the following two years. Today, inflation is not at those levels, and even the target would be lower, falling within the 1.7 billion that the latest draft budget plan (DBP) sent to Brussels classifies under the heading ‘other expenditure’ to be reduced. The percentage increases to be allocated to the various pension brackets are also being finalised, with a range of scenarios depending on the overall structure of the budget. However, it is not difficult to appreciate the political sensitivity of such a measure, which would nevertheless safeguard the increases for the lowest pensions and could provide some additional support for those on the minimum pension.

The meeting – attended by Prime Minister Giorgia Meloni, Economy Minister Giancarlo Giorgetti, Deputy Prime Ministers Antonio Tajani and Matteo Salvini, and the leader of Noi Moderati, Maurizio Lupi – then turned its attention to the banking issue. The package of measures designed to raise the €5 billion earmarked in the budget programme sent to Brussels has been refined (see the accompanying article), but its final form will have to wait until a meeting between Deputy Minister for the Economy Maurizio Leo and the Italian Banking Association (ABI), which could take place as early as today. Under the outline drawn up at last night’s summit, there would be no provision for a further increase in the national health fund, which would therefore follow the path already set out in the public finance projections: next year, it would rise to 151.67 billion, up from 148.84 billion in 2026. Also on the healthcare front, there is scope for a possible increase in the spending ceiling on medical devices (from 0.20 per cent to 0.40 per cent) to cushion the impact of the payback scheme borne by companies in the biomedical sector.