Whether retirement is coming into view or is still many years away in the future, you may be curious to know how pensions work in Italy.
After all, if you’re working in the country, a chunk of your income goes towards your future pensione every month.
Generally speaking, Italy has three types of pension: state pensions, managed by national social security institute INPS, “closed” or professional pensions, and private pension funds.
Of these, the first is the most common.
According to the World Economic Forum, Italy’s state pension is among the most generous in the world, but navigating it can be far from easy.
How does the system work?
Italy has a “notional defined contribution” state pension system, meaning that your state pension amount depends on how much you and your employer contributed to the pension system over your years of work.
Generally, your employer contributes €2 for every €1 you do.
Calculations for how much state pension you’ll receive is complicated.
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Briefly, the amount will be calculated based on your and your employers’ total contributions over the course of your working life, adjusted according to some variables.
These include the country’s rate of growth in gross domestic product (GDP) since you started making contributions, cost of living fluctuations and a ‘transformation coefficient’, which varies depending on how old you are at the time you claim your pension.
What is the pension age in Italy?
All Italian residents are entitled to claim a state pension once they reach 67 years of age, provided they have made contributions for at least 20 years.
Anyone who has made less than 20 years of contributions may still receive a pension (known as pensione di vecchiaia, or age-old pension), but at a lower rate and under very strict criteria.
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It can be possible to retire early and access a state pension (this is known as pensione anticipata) as long as you’ve made at least 42 years and 10 months of contributions if you’re a man, and 41 years and 10 months of contributions if you’re a woman.
Alternatively, if you’ve made contributions for at least 20 years and contributed enough that your monthly pension amount is calculated to be 3 times the minimum social allowance (assegno sociale) – that’s at least €1.603,20 for 2024 – you can retire as much as three years early (aged 64).
It’s worth noting that Italy's retirement age is not permanently fixed: it’s pegged to average life expectancy and re-evaluated every two or three years, so it may be different by the time you retire.
Italy’s pension age is set to be reevaluated in 2026.
What about my contributions in other countries?
If you’ve contributed to a public pension scheme in another country for part of your working life, the good news is that this money could still be of use to you.
Italy has signed a number of bilateral agreements and treaties that mean those contributions can more often than not count toward your Italian pension amount.
Any contributions made within the European Union are guaranteed to be included in your calculations, and Italy has bilateral agreements with Canada, the US, and Australia too.
Following Brexit, the UK lost its bilateral agreement with INPS.
However, you may be able to consolidate your pension amounts using a British Qualified Recognised Overseas Pension Scheme (QROPS), which allows for the transfer of UK pension amounts abroad under different rules.
Please note that The Local cannot advise on individual cases. For more information about how Italy's pension rules may apply in your circumstances, consult an Italian commercialista or another qualified tax professional.
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