NEWS » Italian Pension Freezes Unconstitutional - what next

Italian Pension Freezes Unconstitutional - what next

Mario Monti’s government reform blocked inflation-adjusted increases in pensions of more than 1,500 Euros per month. it was just one of the austerity measures introduced to face up to the crisis, but now it is causing a great turmoil as the country’s high court ruled that pension freezes introduced in 2012 were unconstitutional.

Pensioners must be refunded but if all the pension increases are reinstated, the damage to Italian coffers would be between €12bn and €14bn. For this reason the government is likely to proceed cautiously and only give partial refunds. The problem being that If the government reinstated completely the inflation-adjusted increases in pensions, European rules on public deficit, debt and fiscal structural adjustment might be breached.

As a consequence the government plans to restore inflation-adjusted increases only for low-income citizens who receive modest pensions as lower pensions need to be protected from inflation more than others.

According to the Minister of Economy and Finance, Pier Carlo Padoan, a gradual measure taking into account salary ranges will be necessary.

A Hypotheses could be a total refund for pensions up to the limit of 1,500 Euros gross per month; 80% of the reimbursement for pensions between  1,500 e 2,000 Euros;  60% between 2,000 and  2,500 and nothing for higher pensions.  

Another hypothesis was that of reimbursing indexation of pensions only for one of the two years while the inflation adjustment was stopped.   

The full reimbursement for the three years 2012-2014 could mean a refund of about 3,000 Euros for the pensioners with a pension less than 1,700 and from 2015 they would have an increase of 1,230 Euros a year.

Giulia Lombardo

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