Sistema pensionistico italiano

THE PROBLEMS OF THE

ITALIAN PENSION SISTEM

DUE TO ITALIAN

DEMOGRAPHICS

Sebastiano Casagranda

HOW DOES IT

WORK IN ITALY?

he Italian pension system is

• T

called "pay-as-you-go," meaning

that pension expenses are funded

with contributions currently

collected. Therefore, existing

pensions are paid by those who

are working now

• This system worked well in the

1970s, when the demographic

structure looked like this.

However, it's no longer

sustainable.

• In Italy, pensions are provided by

the INPS (Istituto Nazionale della

Previdenza Sociale). • 2023: births are 379,000,

while people who are 67

years old number

733,000.

• The largest age group in

the population is between

45 and 60 years old.

• The birth rate is

declining, and the trend

is negative. Who will pay

to sustain this system?

• Italy is the second-

highest country in

Europe for pension

spending as a

percentage of GDP in

Europe.

• Italy has the fifth largest

public debt in the world.

• Today, approximately

30% of the INPS budget

is covered by state

transfers, while

contributions only

support 70% of the

budget.

HOW TO SOLVE THIS PROBLEM?

• The solution is to gradually privatize the pension system, providing only a

minimum public pension and leaving the rest to pension funds and similar

arrangements.

• We have to look at virtuous countries like the USA that provide just a basic

retirement income funded by payroll taxes. The majority of pensions are

employer-sponsored pension plans and Individual Retirement Accounts

(IRAs). They do not burden the community and are sustainable in the long

term.