Pensions 2027, government considers freezing 3-month age increase

The freezing, or not, of the adjustment from 2027 of the retirement age by three months to life expectancy will, in all likelihood, be one of the key points of the next autumn manoeuvre. The government seems intent on suspending this increase, which is already indicated in the demographic 'projections' of ISTAT and in the updated tables of the General Accounting Office of the State, but there are those who consider it almost indispensable. This is the case of the Parliamentary Budget Office (UPB): during a parliamentary hearing on the effects of the demographic transition, president Lilia Cavallari stated that 'it is important to maintain the automatic adjustment to life expectancy of the minimum age and contribution requirements for access to retirement in order to mitigate the increase in the dependency ratio of pensioners and prevent pensions from being too low, with consequent pressure on welfare institutions'.

ISTAT's latest indications on demographic trends show that in the two-year period 2027-2028 retirement requirements should be adjusted by three months. Consequently, the old age threshold should rise from 67 to 67.3 years and that for advancement with only paid contributions (regardless of age) from 42 years and 10 months to 43 years and one month for men and from 41 years and 10 months to 42 years and one month for women. An increase that is already included in the estimates of the last report of the General Accounting Office of the State on the medium-long term trends of the pension and social security system.

As the Minister of the Economy, Giancarlo Giorgetti, has repeatedly implied, and as the Undersecretary for Labour, and Deputy Secretary of the League, Claudio Durigon, has repeatedly stated, the government is inclined to freeze this increase for the two-year period 2027-2028. It remains to be seen whether the suspension will affect all retirement channels concerned or only the old-age channel. Which in any case should remain accessible at the age of 67. The intervention should be triggered with the next autumn manoeuvre.

The Parliamentary Budget Office firstly argues that 'the presence of automatic adjustment mechanisms capable of defining ex ante and in a transparent manner the distribution of demographic and economic risks between the active and retired generations appears preferable to ex post and discretionary interventions'. The Upb emphasises that the role of automatic adjustments of the retirement age and contribution requirements to changes in life expectancy 'has proved central, and will prove even more so in the future, in ensuring the control of the dynamics of the ratio between pension expenditure and GDP'. For this reason, according to president Cavallari, 'it is important that the automatic adjustment to life expectancy of the minimum age and contribution requirements for access to retirement be maintained in order to mitigate the increase in the dependency ratio of pensioners and avoid pensions being too low, with consequent pressure on welfare institutions'.

The adequacy of future pension benefits, which especially affects young people with discontinuous careers, remains one of the main knots to be unravelled on the delicate social security front, also taking demographic transition into account. And the UPB also points this out, arguing that 'the automatic linking of the retirement age to life expectancy also has important implications from the point of view of the adequacy of pension benefits'. The Parliamentary Budget Office argues that 'the long process of reforming the pension system seems to have ensured - at least in the long run - a scenario of relative control of expenditure trends', but adds: 'future benefits will be comparable with current ones if the labour market is able to ensure long, continuous and well remunerated careers'.