MNI:Italy To Drop Early Retirement Rule After EUR11.6 Bln Bill

Italian Prime Minister Mario Draghi aims to drop costly rules allowing early retirement introduced under the previous administration, but officials are working to avoid a blanket return to the earlier unpopular requirement for almost all workers to stay in employment until the age of 67, a source close to the reform under preparation told MNI.

The so-called Quota 100 system, which allows people to retire from the age of 62 if their age plus years in employment add up to 100, must be renewed by Jan. 1, or else Italy will revert to the previous set-up, which became a symbol of austerity when it was introduced by former Labour minister Elsa Fornero under then Prime Minister Mario Monti.

Draghi wants to find a middle way. Options include allowing people to take early retirement at 63, but to receive a reduced pension until 67, the source said. A variation of this might return the main pensionable age to 67, while reducing the minimum requirement for years worked in order to take early retirement to as few as 41, from the current limit near 43.

LEAGUE EXERTING PRESSURE

Quota 100 has already added EUR11.6 billion to government pension costs since it was introduced three years ago by the populist Five-Star Movement and its far-right coalitions partner the League. Led by the ambitious Matteo Salvini, the League is now fighting to keep Quota 100, and, while a senior party official admitted it has little chance of success, he noted that it was deploying the issue to its advantage in other areas of policy.

The League says it wants to keep Quota 100 going for a few more years by saving the EUR6 billion a year spent on Italy's minimum guaranteed income, which was a flagship Five-Star policy. This is a tactic "to put pressure on Draghi and the Five Stars," the senior League official told MNI.

In fact, Draghi also wants to close the guaranteed income scheme. But he is managing a coalition grouping both the League and Five-Star, and needs to pass other key legislation, such as an overhaul of the courts and the national budget, during the autumn. Dropping the guaranteed income could see Five-Star walk away from government, so the prime minister is likely to accept a solution that simply reduces its cost.

Cutting government outlays on pensions, which totalled EUR233 billion in 2020, is also key, as the country's already demographically-challenged population ages further.