The minimum age to request early retirement (seniority pensions) will increase from 57 to 61 years old by 2013 for almost all Italian workers, under a controversial reform that took effect on January 1, 2008. The reform, approved as part of the 2008 budget process, will soften retirement age changes approved by the previous government in 2004.
The changes were included in a document known as the Welfare Protocol. It had been approved last summer by the government, unions and employer representatives in an effort to introduce labor market reforms to the Italian retirement system. In addition to changing the retirement age, the protocol would have changed the annuity rates for the notional defined contribution (DC) system.
However, due to the controversy over the proposals, the Parliament delayed some of the changes. Instead of setting a retirement age at 60 years old as of January 2008 – the so-called “scalone” introduced by the previous government in 2005 – the Parliament approved a quota system based on a combination of age and seniority. This will be phased in through the end of 2013. As a result, it will still be possible to retire early on very favorable terms until that time.
Under the previous system, which was in place until this year, workers could retire at age 57 if they had contributed to the system for 35 years.
In addition, the Parliament put off any changes to the DC annuity rates until 2010. At that time, the changes are expected to decrease the pension paid by between 6 percent and 8 percent, depending on the effective retirement date.
View tables of new quota system
Read Watson Wyatt’s press release
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