Pensions: Expenditure at 17% of GDP in 2040. Derogations to the Fornero and Quota 100 cost 40 billion
The latest report of the State General Accounting Office: between 2019 and 2023 from the 'Fornero' exemptions a higher weight on GDP of more than 0.4 per cent per year. Due to the tightening of the last two manoeuvres, there will be a lower impact of 0.1% in the coming years. Peak expenditure in 2040: 17% of domestic product
by Marco Rogari
3' min read
Key points
3' min read
Almost 40 billion in just five years: between 2019 and 2023. This is the bill, in terms of the greater impact of pension expenditure on GDP, paid to the exceptions to the Fornero law and previous reforms, starting with Quota 100, but also, albeit to a much lesser extent, by Quota 102 and 103. This is quantified by the latest report of the State General Accounting Office on the medium-long term trends of the pension and social security system, which slightly corrects the forecasts formulated in the Nadef 2023, taking into account the updated framework of the Def 2024 (although lacking the programmatic targets), the latest ISTAT projection on demographic trends, and the measures introduced in the 2024 budget law to trigger an early retirement squeeze and strengthen the indexation cut on higher paychecks.
From the 'Fornero' derogations over 0.4 points of GDP more spending per year
The dossier points out that the various interventions with which, starting in 2004, the reforms enacted since the early 1990s have been softened, leading to "a widening of expenditure and a retrogression in the path of raising the requirements for access to retirement", have produced in the 2019-2023 period, in the so-called 'national scenario', "a greater incidence of expenditure in relation to GDP equal on average to over 0.4 points per year". And among the main measures indicative of this burden on the accounts is Quota 100, the possibility of early exit with 62 years of age and 38 of contributions, which was fully operational on an experimental basis from 2019 to 2021. But the Ragioneria points out that 'the years after 2021 are also affected by this measure due to the multi-year nature of the allowed early retirement period'.
By 2040 peak expenditure: 17% of GDP
The same Mef technicians also point out how the restrictions introduced by the Meloni government with the last two manoeuvres, from the crackdown on the indexation mechanism of pension treatments to inflation to the binding linking of the contributory method for outlays with Quota 103, have favoured "a slightly lower incidence of expenditure of about 0.1 percentage points" for the forecast period from 2024 to 2040, the year in which outlays will reach a peak of 17 per cent of GDP, as already indicated in the Def. The dossier reiterates that at the end of the two-year period 2023-24 the level of the ratio between expenditure-GDP will not fall below 15.6 per cent also due to the high level of indexation, 'attributable to the significant increase in the inflation rate recorded' from the end of 2021 until last year. A level that is expected to remain substantially unchanged until 2028 and then rise further until 2040 due to the growth in the ratio between the number of pensions and the number of employed persons induced by the demographic transition, only partly offset by the increase in the minimum requirements for access to retirement.
Positive effects of the contribution method on accounts
After this surge, from 2044 the impact of outlays for pensions on GDP will decrease first gradually and then rapidly, falling to 16% in 2050, and then to 13.9% in 2070, thanks to "the generalised application of the contributory calculation, which is accompanied by the stabilisation, and subsequent reversal, of the ratio between the number of pensions and the number of employed persons". The Ragioneria also reiterates that the set of pension reform measures approved since 2004, together, has generated a reduction in pension expenditure "equal to over 60 percentage points of GDP, cumulated to 2060".
