Italy’s gradual pension reform

ROME (Reuters) – Italy’s government aims to raise the minimum retirement age gradually from 2008 and reduce pension pay-outs for those who choose to retire early, Labor Minister Cesare Damiano said in a newspaper interview. The government has promised to scrap a pension reform program approved by Silvio Berlusconi’s previous center-right administration which would raise the retirement age to 60 from 57 from January 2008 because it says the increase is too abrupt. It is currently negotiating with trade unions about how to replace the Berlusconi reform with other measures that will still allow it to save money and make the creaking state pension system more financially sustainable. Damiano told the Repubblica daily the government proposed «a more gradual» increase in the retirement age. He did not give details. Savings and revenues would come from cracking down on «privileges» for some categories of pension funds, including parliamentarians, unifying several state pension agencies and increasing pension contributions paid on behalf of temporary workers. Berlusconi’s reform was estimated to save -9 billion a year from 2010. Damiano said pay-outs must be linked more closely to retirement age and the contributions paid in, with those who retire early getting smaller sums than those who work longer. This adjustment to the so-called pension coefficients has been strongly resisted by some unions. «The revision of the coefficients is an aspect that guarantees financial sustainability to the system, considering that, fortunately, life expectancy has increased,» Damiano said. He said the government would make allowances for workers who had paid lower contributions because they had been employed on mainly temporary contracts, and also for workers who did particularly tough jobs. These would be excluded from the increase in the retirement age, he said, without specifying which jobs would qualify. The government aims to reach a deal with the unions by June 28, he said. The government had previously promised to include its pension reform in the 2007 budget, presented last September, and then said the reform would be ready by this March.

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