Old Age Pension Scheme for Private Sector Employees
Fondo pensioni lavoratori dipendenti, FPLD
Coverage
Mandatory insurance
- Employees in subordinate private sector employment, including domestic workers.
Financing
General finances
- Mainly PAYG-financed from insurance contributions.
- State finances any deficit.
Contribution rates
- Fixed share of monthly gross earnings (33% in general); up to maximum annual earnings ceiling (EUR 103,055 in 2020).
- Contributions shared between employer (23.81%) and employee (9.19%).
- Different contribution rates apply to distinct occupational groups; reduced contributions for domestic workers.
- General statutory daily minimum contribution is EUR 49 or the sectoral minimum wage set by collective agreement if higher (special minima for some occupations or in case of part-time work).
- Employees have to pay an additional 1% solidarity contribution on annual pensionable earnings exceeding EUR 47,379 (EUR 3,948 per month) without impact on pension benefit.
Taxation of contribution payments
- Contributions are fully deductible from income before taxes.
Administration
- Managed by National Institute for Social Security (INPS).
- Supervised by Ministry of Labour and Social Policies and Ministry of Economy and Finance.
Qualifying Conditions
Qualifying conditions
- Standard old age pension (pensione di vecchiaia): statutory retirement age is 67; (retirement age will be gradually increased based on increase in life expectancy; temporarily suspended until end of 2026); minimum insurance period: 20 years of paid or credited contributions; pension amount: must be above pension value threshold (i.e. at least 1.5 times the monthly old age social allowance (assegno sociale), about EUR 690 per month).
- Old age pension for persons with insufficient pension benefits (below pension value threshold): retirement age extended to age 71, with a minimum qualifying period of 5 years of paid contributions, irrespective of pension amount in notional defined contribution (NDC) account.
- Special conditions apply for mothers (12 months per child, up to maximum of 24 months prior to standard retirement age), caregivers (providing care for disabled spouse or relatives), for persons under special circumstances (e.g. arduous jobs) and for specific professions (e.g. pilots, artists, athletes).
Early retirement
- Early contributory pension with age requirement(pensione anticipata contributiva): available at age 64 with 20 years of contributions under the condition that pension amount corresponds to 2.8 times the old age social allowance (about EUR 1,289 per month in 2020), without negative adjustments to pension benefits.
- Early pension (pensione anticipata) without age requirement: minimum contribution period is 42 years and 10 months for men, 41 years and 10 months for women (still applying in 2020), reduced to 41 years of contributions in case of early career workers.
Deferred retirement
- Deferred retirement is possible up to age 71, with more favourable calculation coefficients.
Combining employment & retirement
- Termination of current employment is a precondition for claiming pension benefits.
- Combination of income from new employment and old age pensions (incl. pensions from early retirement) is possible without limitations.
Benefits
Pension benefits
- Earnings-related pension benefits (with 13 instalments); based primarily on the amount of contributions paid throughout the working career, credited contributions (e.g. for maternity, military service, sick pay; child-raising) and purchased/redeemed periods not covered by contribution obligations (e.g. periods to obtain university degrees).
- Maximum pension amount due to the ceiling for pensionable income and contributions.
- No fixed minimum in the notional defined contribution (NDC) scheme, but supplements available under specific conditions (fourteenth payment and special tax allowance; see also social increase).
- Fourteenth payment (14ma pensione): additional benefit as 14th instalment (paid once a year in July) requiring pensioners to be at least 64 years old, with personal income below certain levels; amount of supplement depends on personal income and on the length of the contribution period: for annual income up to EUR 10,044, the benefit amounts to a maximum of EUR 437 (with contribution period of 15 years), EUR 546 (with contribution period between 15-25 years), EUR 655 (with contribution period above 25 years); for annual income up to EUR 13,392 the benefit amounts to EUR 336, EUR 420 or EUR 504 depending on the contribution period.
- Special tax allowance (Importoaggiuntivo): flat-rate bonus of EUR 155 paid in December as a rebate for pensioners who are exempted from paying income tax because of their low income; pension must not exceed the minimum pension amount (EUR 516 per month in 2020) plus the tax bonus; annual income of single person must not exceed 1.5 times the minimum pension amount (EUR 10,044); annual income of couple must not exceed 3 times the minimum pension (EUR 20,088).
Benefit calculation
- Earnings-related pension is based on notional contributions, set at 33% of insured earnings (pensionable income) with lower and higher ceiling; calculated amounts are adjusted annually according to the average rate of increase in GDP in the last 5 years, multiplied by an actuarial coefficient that varies according to the insured person’s age at the time of the initial pension payment (ranging from 4.2% at age 57 to 6.513% at age 71 in 2020).
- The coefficients are adjusted biannually in relation to long-term changes in GDP accounting for the evolution in the income from work subject to mandatory contributions, and to changes in life expectancy (next downward adjustment for 2021-22).
- Indexation: automatic yearly adjustment of pensions, based on changes in consumer price index and differentiated with regard to pension levels, subject to frequent changes; currently, pensions up to 4 times the minimum pension (EUR 2,052) are fully adjusted, higher pensions only partially (percentages range from 77% down to 40%).
Taxation and social security contributions
- Contributory public pension benefits are subject to income tax (minimum tax-exempt level of EUR 8,000 p.a. for pensioners).
- Temporary solidarity contribution on pensions exceeding EUR 5,000 per month (deductions ranging from 15% to 40% of pension brackets above EUR 100,160 p.a.).
- No social security contributions.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory insurance
- Employees in subordinate private sector employment, including domestic workers.
General finances
- Mainly PAYG-financed from insurance contributions.
- State finances any deficit.
Contribution rates
- Fixed share of monthly gross earnings (33% in general); up to maximum annual earnings ceiling (EUR 103,055 in 2020).
- Contributions shared between employer (23.81%) and employee (9.19%).
- Different contribution rates apply to distinct occupational groups; reduced contributions for domestic workers.
- General statutory daily minimum contribution is EUR 49 or the sectoral minimum wage set by collective agreement if higher (special minima for some occupations or in case of part-time work).
- Employees have to pay an additional 1% solidarity contribution on annual pensionable earnings exceeding EUR 47,379 (EUR 3,948 per month) without impact on pension benefit.
Taxation of contribution payments
- Contributions are fully deductible from income before taxes.
- Managed by National Institute for Social Security (INPS).
- Supervised by Ministry of Labour and Social Policies and Ministry of Economy and Finance.
Qualifying conditions
- Standard old age pension (pensione di vecchiaia): statutory retirement age is 67; (retirement age will be gradually increased based on increase in life expectancy; temporarily suspended until end of 2026); minimum insurance period: 20 years of paid or credited contributions; pension amount: must be above pension value threshold (i.e. at least 1.5 times the monthly old age social allowance (assegno sociale), about EUR 690 per month).
- Old age pension for persons with insufficient pension benefits (below pension value threshold): retirement age extended to age 71, with a minimum qualifying period of 5 years of paid contributions, irrespective of pension amount in notional defined contribution (NDC) account.
- Special conditions apply for mothers (12 months per child, up to maximum of 24 months prior to standard retirement age), caregivers (providing care for disabled spouse or relatives), for persons under special circumstances (e.g. arduous jobs) and for specific professions (e.g. pilots, artists, athletes).
Early retirement
- Early contributory pension with age requirement(pensione anticipata contributiva): available at age 64 with 20 years of contributions under the condition that pension amount corresponds to 2.8 times the old age social allowance (about EUR 1,289 per month in 2020), without negative adjustments to pension benefits.
- Early pension (pensione anticipata) without age requirement: minimum contribution period is 42 years and 10 months for men, 41 years and 10 months for women (still applying in 2020), reduced to 41 years of contributions in case of early career workers.
Deferred retirement
- Deferred retirement is possible up to age 71, with more favourable calculation coefficients.
Combining employment & retirement
- Termination of current employment is a precondition for claiming pension benefits.
- Combination of income from new employment and old age pensions (incl. pensions from early retirement) is possible without limitations.
Pension benefits
- Earnings-related pension benefits (with 13 instalments); based primarily on the amount of contributions paid throughout the working career, credited contributions (e.g. for maternity, military service, sick pay; child-raising) and purchased/redeemed periods not covered by contribution obligations (e.g. periods to obtain university degrees).
- Maximum pension amount due to the ceiling for pensionable income and contributions.
- No fixed minimum in the notional defined contribution (NDC) scheme, but supplements available under specific conditions (fourteenth payment and special tax allowance; see also social increase).
- Fourteenth payment (14ma pensione): additional benefit as 14th instalment (paid once a year in July) requiring pensioners to be at least 64 years old, with personal income below certain levels; amount of supplement depends on personal income and on the length of the contribution period: for annual income up to EUR 10,044, the benefit amounts to a maximum of EUR 437 (with contribution period of 15 years), EUR 546 (with contribution period between 15-25 years), EUR 655 (with contribution period above 25 years); for annual income up to EUR 13,392 the benefit amounts to EUR 336, EUR 420 or EUR 504 depending on the contribution period.
- Special tax allowance (Importoaggiuntivo): flat-rate bonus of EUR 155 paid in December as a rebate for pensioners who are exempted from paying income tax because of their low income; pension must not exceed the minimum pension amount (EUR 516 per month in 2020) plus the tax bonus; annual income of single person must not exceed 1.5 times the minimum pension amount (EUR 10,044); annual income of couple must not exceed 3 times the minimum pension (EUR 20,088).
Benefit calculation
- Earnings-related pension is based on notional contributions, set at 33% of insured earnings (pensionable income) with lower and higher ceiling; calculated amounts are adjusted annually according to the average rate of increase in GDP in the last 5 years, multiplied by an actuarial coefficient that varies according to the insured person’s age at the time of the initial pension payment (ranging from 4.2% at age 57 to 6.513% at age 71 in 2020).
- The coefficients are adjusted biannually in relation to long-term changes in GDP accounting for the evolution in the income from work subject to mandatory contributions, and to changes in life expectancy (next downward adjustment for 2021-22).
- Indexation: automatic yearly adjustment of pensions, based on changes in consumer price index and differentiated with regard to pension levels, subject to frequent changes; currently, pensions up to 4 times the minimum pension (EUR 2,052) are fully adjusted, higher pensions only partially (percentages range from 77% down to 40%).
Taxation and social security contributions
- Contributory public pension benefits are subject to income tax (minimum tax-exempt level of EUR 8,000 p.a. for pensioners).
- Temporary solidarity contribution on pensions exceeding EUR 5,000 per month (deductions ranging from 15% to 40% of pension brackets above EUR 100,160 p.a.).
- No social security contributions.
Legal Basis: Law No. 88/1989; Pension ReformLaw No. 335/1995; Legislative Decree No. 565/1996; Budget Law No. 388/2000; Decree Law (D.L.) No. 247/2007; D.L. No. 81/2007 converted into Law No.127/2007; Law No. 133/2008; Law No. 102/2009; Law No. 122/2010; Law No. 214/2011 (Fornero pension reform); Law No. 92/2012; Law No. 147/2013; Law No. 190/2014; Law No. 109/2015; Law No. 208/2015; Stability Law No. 232/2016; Law No. 205/2017; D.L. 4/2019, converted into Law No. 26/2019; Budget Law 160/2019; Income Tax Act (DPR) No. 917/1986 (Testo unico delle imposte sui redditi, TUIR).