The Social Security in Italy Project Communicate October 2006
Law Social Security “1st pillar” Basic pension is covered by D.L. 503/1992 and L. 335/1995
Financial structure Pay as you go
Social security contribution Total percentage: 32,70% Of which: For employers 23,81% For employees 8,89% Of which: For social security benefits For assistance benefits
The Income Tax on the annual salary From 0 to % From to % From to % Over %
The impact Income Tax on the annual salary: EXAMPLE: ANNUAL SALARY (23% TILL = FROM TO (33%)= FROM TO (39%)=2.535 Total= (average 27,47%)
Typology of Benefits Life annuities
Form of pension provided for 1. OLD AGE F 60 – M SENIORITY AGE F and M 57 years old (from 01/01/08 60 years old) and 35 contribution years (years of job); Or, 39 contribution years (from 01/01/08 40 contribution years)
Form of pension provided for 3. SURVIVORS’BENEFITS 4. DISABILITY
The substitution rate The ratio between pension and the last salary is 80%
Pension adjustment Indexation to inflation or cost of living
State Pension expenditure 13,5% of GDP in 2001 it will rise to 15,7% in 2040 if no further reforms are taken
SUPPLEMENTARY FUNDS (2 nd Pillar) THE 98,3% OF THE ITALIAN BANKS (2004) HAVE SUPPLEMENTARY FUNDS ARRANGEMENTS
SUPPLEMENTARY FUNDS ARE: OPTIONAL COMPANY FUNDS
TIPOLOGY OF FUNDS PENSION FUNDS
SOURCES OF SUPPLEMENTARY FUNDS COLLECTIVE AGREEMENTS (NATIONAL LEVEL & COMPANY LEVEL) COMPANY REGULATIONS
FINANCIAL SYSTEM DEFINED CONTRIBUTION FUNDED
FINANCIAL SYSTEM CONTRIBUTION: TOTAL PERCENTAGE 4% FOR THE EMPLOYERS 2% FOR THE EMPLOYEES 2%
FORM OF PENSION PROVIDED FOR OLD AGE: 1. AGE 2. CONTRIBUTION 3. DISABILITY 4. SURVIVOR’S BENEFITS 5. ILLNESS 6. LABOUR ACCIDENTS
BENEFITS MIXED WHEN YOU RETIRED EXEMPTION OF CONTRIBUTIONS AND TAXATION OF INCOMES AND BENEFITS (2% Employer 2% Employee) In case of TERMINATION of the EMPLOYMENT RELATIONSHIP the WORKER can REDEEM HIS PENSION ENTITLEMENT or transfer HIS position TO ANOTHER FUND
MAIN PROVIDERS Fund asset management is entrusted to qualified financial intermediares: savings, management companies, banks, stock brockerage companies and insurance companies
Federazione Autonoma Bancari Italiani International & Projects Department “Communicate Project” October 2006