Italy wants to lower the retirement age to free up jobs for its younger population, but the head of the nation’s social security and pensions agency thinks it’s not only a bad move, but a costly one.
The proposal would reduce Italy’s retirement age to 62 (currently 66.7 for men and 65.7 for women) if they paid their contributions for at least 38 years. The goal is to pump new blood into its workforce, but Tito Boeri, president of the Istituto Nazionale Previdenza Sociale, told parliament it will increase the retirement system’s debt by “about 100 billion euros.”
That’s US $115 billion, about the size of some of its current public plans. Italy is currently struggling with €2.3 trillion, or 131.80% of its gross domestic product, worth of debt, according to tradingeconomics.com.
“We have no choice but to sound an alarm,” Boeri said, agreeing with the Bank of Italy’s warning against the retirement-age reduction as it could upset the pension system’s balance.
In response, Mitteo Salvini, Italy’s deputy prime minister and minister of the interior, said the pension chief should resign from the agency and run for office. “As an Italian I urge Mr. Boeri, who again today defends his beloved Fornero law, to resign from the presidency of INPS and run in the next elections asking for votes to send people into retirement at 80,” he said.
The “Fornero” reforms of 2011 raised the national pension age to its current level. The early retirement plan would roll back much of these changes, something Salvini has been pushing for.
The deputy prime minister said the proposal would lead to about 400,000 early retirements, which would add a similar number of jobs to the economy. He also met with 12 top industry managers last week and said state-controlled companies are primed to hire tens of thousands of new employees should the changes occur.
Boeri has forecasted a 2019 budget of 7 billion euros ($8.1 billion) that would go toward the early retirements, should the Italian government make the change. He told lawmakers that 62-year old retirees would already increase pension spending by one percentage point of the 2021 GDP.