Out of the seven million, or 43 percent, five million receive an average pension of €702 a month while 1.2 million survive on just €294, according to the agency's report for 2013.
The pension shortfall is mainly due to “short or interrupted careers which did not produce an adequate flow of funds,” Vittorio Conti, the agency’s head, was quoted in Corriere as saying.
“The seven-year crisis has produced latent social problems,” he added.
“We now have more vulnerable people: millions of unemployed, young and old, and families without a stable income who risk poverty and social exclusion.”
Italy had a generous pension system up until the financial crisis hit in 2008, with the monthly amount received equaling up to 80 percent of a person’s last salary.
Pensions are now calculated according to a contribution-based system following a controversial overhaul under Mario Monti's government, while the retirement age was raised in 2012 to 66 for men and 64 for women.
The country also has one of the oldest populations in the world, with 151.4 people over the aged of 65 for every 100 young people under 15. Italy has the second-oldest population in Europe, behind Germany with 158 seniors for every 100 young people. Life expectancy is 79.6 years for men and 84.4 for women.