Pensions are often associated with retirements and old age citizens, in essence a pension can be described as an efficient way to save money that will provide you with an income in later years. There are different types of pension packages, some schemes are facilitated by the government while others are run by private companies, so always you can find pension plan in Italy tailored to your expectations.
An important change in the latest austerity measure of 2012 is the new retirement age, the Italian government increased the retirement age by an additional three years; this basically pushes up the retirement age, which allows people to work for longer, well into their old age.
The new age is 66 for men while the female counterparts retirement age will slowly rise up to 66 by the year 2018. However, under this new pension reform, it is more than likely that individuals with minimal number of years of contribution will accrue lower pensions; for people who have been unemployed for prolonged lengths of time may find that when they start working and eventually retire, the amount of state pension benefit they will receive might be minimal, this is because the new state pension system is calculated on the amount of contributions made in all the working years.
Also self-employed individuals may not be spared the wrath of this new system, because they tend to make lower and interrupted contributions towards their pension, therefore reducing their pension benefit when they retire, essentially they could be more deprived than workers with uninterrupted and higher contributions.
The recent increase in retirement age spells an increase in the length of employees’ service, which will cost employers more for the most common defined benefit plan. As a result of the austerity measures introduced in 2012, employed male workers in Italy will be required to make about 42 years of contributions while female workers will need about 41 years in order to claim a pension.
There are two types of pension funds in Italy these include: Closed or contractual pension funds and open pension funds. Generally, closed or contractual pension funds are administered usually as company pension funds by a company or implemented as industry-wide pension funds organized by the employers’ association and the trade unions. Open pension funds are usually provided by insurance companies, banks and investment management companies for a wide group of people such as the self-employed.
If you decide to relocate to Italy, you can request that your pension be paid into your Italian bank account, you will need to notify the following entities to notify them of your impending departure and provide them with your Italian new address: The International Pension Centre (if you are already receiving a State Pension) and HM Revenue & Customs’ National Insurance Contributions Office.
Contribution by Michael Pawlicki