The Italian government, private employers and trade unions have recently signed an accord underpinning a plan to transfer 5 billion euros from company coffers into the state pension fund. The agreement is a key plank in the government’s plan to revamp the nation’s pension system, using severance pay funds until now held by companies and often utilised as cheap financing. ‘The Italian financial system will have substantial new resources and workers will be able to top up their state pensions,’ said Prime Minister Romano Prodi, assuring that non-state pension funds with sizeable resources would finally be available in Italy.
Under the agreement, all severance pay (TFR) accrued until now will be transferred to the state fund unless workers decide otherwise. The accord concerns only companies with more than 50 employees. Workers must also decide what to do with the TFR money that their employer pays them in future. It can be paid into pension funds created for various job categories or another fund of their choice. Economy Minister Tommaso Padoa said that the accord would have no effect on the accounts laid out in the government’s budget bill.
The innovation in Italy’s pension system was slammed by centre-right economist and MEP Renato Brunetta, who called it a ‘scam’ which would harm workers and companies. He also said it would kill off the alternative pension funds because few workers would choose to put their money at risk when they could give it to a state fund which offered them firmer guarantees.