Retirement in Italy

Elderly Italian citizens and foreigners with the right to stay in the country for a long time receive a pension to maintain their usual standard of living. Italy was the first in Europe to establish a fund to which the state and owners of large enterprises transferred money to support disabled and elderly citizens. This happened 125 years ago, and in 1919 payments from such a fund became mandatory.

The modern pension system in Italy is solidary, that is, it is formed from social contributions from citizens of working age. Recipients of such a benefit in the amount of about 1,200 euros have the opportunity not only to pay for utilities, visit entertainment venues, monitor their health, but also to visit relatives in different regions, and travel abroad. Foreigners who have received a residence permit or an Italian passport are also entitled to state benefits if they pay contributions to the Pension Fund for at least 5 years, live in the country for 10 years and receive no more than 5,830 euros per year. Foreigners who have moved for permanent residence can transfer their pensions here by submitting documents through the consulate.

The pension system in Italy

Since 1919, it has consisted of a state, professional and private pension. Every resident of the country has the right to receive old-age benefits when they reach the age of 67. An important condition that he must comply with is contributions to the pension fund for twenty years or more. If the requirement is not met, his income will be proportionally reduced in accordance with the total amount of contributions for the period of employment, the level of GDP growth of the state, the cost of living and a number of other indicators.

Important

The age at which old-age benefit payments begin changes every 2 years. Therefore, by the time a particular person retires, he may become different. For example, in 2023, payments began to be transferred at 67 years and 5 months, and in 2025 it is expected that the retirement age will be raised by 3 months. 

Foreign residents receive benefits subject to five-year contributions to the Italian Pension Fund, registration of a residence permit or passport at least ten years before retirement age and an annual income not exceeding 5,830 euros.

State Pension Fund

INPS is the state Pension Fund of Italy, whose website describes in detail the planned and early retirement programs for citizens and foreigners. Usually, the employer deducts 2 € for every 1 € contributed by an employee.

Every year, the Government sets a minimum monthly old-age allowance. For example, in 2023 it amounted to €503.27. If the social contributions that the applicant paid for a pension, being of working age, do not allow him to receive a minimum state pension, and this person has lived in Italy for ten years or longer, he additionally receives «old age assistance» or assegno sociale. Due to this, the monthly income of such a pensioner still reaches a minimum amount.

Attention

Early retirement is possible for women with 41 years and 10 months of experience and for men with 42 years and 10 months of experience. Other categories of citizens are former nurses, holders of professions from the «heavy» category, working mothers with an experience of 35 years or more (a separate Opzione Donna program is provided for them). 

Receiving a pension in a state pension fund is:

• low risk of insolvency: at least a minimum benefit will be issued in any case;
• stability of the accrual rules;
• money for the deceased spouse: (80% of his income) continues to be paid to his wife or husband;
• the impossibility of full or partial withdrawal of capital;
• a small number of pension programs and the age at which funds are received. 

Non-governmental pension funds

Private pension funds in Italy are not mandatory, they are supervised by local banks and insurance companies. In Italian they are called piano individuale pensionistico (PIP) or fondi pensione aperto (FPA). Any resident can open an account in such a PF and deduct money, even if he is not employed. This option is popular among self-employed citizens without a permanent employer. The average minimum period during which funds will be transferred to such a fund is 35 years, the minimum age of entry is 30 years.

The amount of contributions is calculated according to the program chosen by the applicant and the age at which social contributions begin. It is allowed to switch from program to program once a year. The minimum contribution to a private pension fund is 150 €, and the maximum is 5,164 €.

Receiving a pension in a non–state pension fund is:

• the opportunity to partially or completely withdraw the accumulated money under certain conditions;
• loyalty to citizens who intend to retire early;
• Rule variability: a bank or insurance company can change the benefit calculation formulas at any time;
• not all private pension funds continue to pay the money of the husband or wife to the widower spouse. 

Types of pension

The country has a classic old-age pension, payments to the disabled, early benefits and a second pension for foreign citizens. The Italian authorities are trying to take into account different life situations and flexibly approach the calculation of payments based on work experience.

Old age (social)

The pensioner turned 67 years old. He worked and made contributions to the state pension fund for 20 years with an income of 30,000 euros. In such a situation, the replacement rate will be 2% per year. Such a person will be credited with € 12,000 per year.

If the pensioner's monthly allowance does not reach the minimum amount established in Italy, he is credited with the missing funds from the state. A prerequisite for additional payment is residence in the country for ten years or longer.

On disability

Such an allowance can be issued to women after 56 years of age and men after 61 years of age. At the same time, it is important to work for 20 years anyway (and make social contributions all the time). The degree of disability is considered individually.

Important

There is no minimum amount for such a benefit. In some cases, retirement is possible after 15 years of service. Such situations are described in the Amato Amendment.    

Early payment

Retirement before reaching the official age of 67 is available to citizens if they have sufficient experience. A man needs to work for 42 years and 10 months, a woman needs to work for 41 years and 10 months.

A popular social program for women who intend to retire early is Opzione Donna. Candidates for inclusion in this scheme must have worked for 35 years and be at least 61 years old. The amount of payments depends on how many children there are in the family. If there is one child, the Opzione Donna program will open for his mother two years earlier, and if there are two children, three years earlier. That is, at the age of 58.

The second one (for foreigners)

Holders of passports from other countries can receive a civil or state pension if they are unable to work due to age and are below the poverty level. In Italy, it is equal to 780 € per month. Here are the conditions for obtaining a civil pension for the holder of a passport of another country:

• 67+ years old;
• the period of legal residence in Italy is 10 years, the last two years – with the preservation of tax residence;
• Isee or individual income criterion does not exceed € 9,360;
• the total value of the property (if available) is 30,000 € or less;
• the absence of a car with an engine capacity of 1,600 cm3, purchased less than two years before retirement.

Conditions and methods of obtaining

To receive a pension in Italy, you need to reach the age of 67, deduct social contributions to the local pension fund for 5 years and live in the country for permanent residence for at least 10 years. The funds are transferred to a bank account.

Not all pension payments can be exported from Italy to another country if you change your place of residence. First of all, this applies to recipients of a minimum or small allowance. The income of such people may decrease when they leave for permanent residence in another state.

If a recipient of a state pension from INPS plans to move to another country, he must meet the following conditions:

• officially change his place of residence;
• report this to the state pension fund so that employees recalculate payments;
• send a notification about a change of residence abroad.

The portal of the State Pension Fund of Italy indicates that social pensions, payments to the disabled and the minimum pension are not paid to citizens permanently residing abroad. You will be able to receive only the basic part of your estimated amount, based on work experience and social contributions to the pension Fund.

Attention

The Italian pension transferred to the card will be available abroad. But it is worth remembering that employees of the state pension fund often check where the pensioner actually lives. If INPS inspectors find out that the beneficiary has moved abroad for permanent residence without notice, social benefits for Italian residents are closed. In the worst case, you will have to pay a fine for illegally receiving budget funds. 

If a working foreigner with a residence permit pays social contributions to the state Pension Fund of Italy, in the event of his death, 80% of the savings will be inherited by his legal spouse. You need to find out how much money will be inherited at the PF office. Private pension funds do not provide such an opportunity.

Required documents and application submission

To transfer a pension to Italy, you must apply to the consulate:

• request for transfer of payments;
• a copy of the passport;
• a copy of the employment record;
• a certificate of payroll for the five years preceding retirement.
• Men additionally provide a copy of the military ID. 

To receive social benefits from INPS, you should submit for consideration to this organization:

• an Italian passport, residence permit or permanent residence;
• checks for the transfer of social contributions;
• any of the documents related to the length of service: employment record, payroll statements;
• passport of the country of origin. 

INPS has the right to request additional documents for consideration.

Important

Holders of passports of countries in which it is allowed to have two nationalities will have to choose the place of transfer of pension payments. If there is a ban on obtaining two or more citizenship in the country of origin, old-age benefits will be paid only by Italy after checking permanent residence and work experience.

The size of the pension

In the country, the amount of pension payments is influenced by quotas and the number of contributions made, and the importance of reaching a certain age of work experience is given second place. In Italy, there are three approaches to calculating benefits: Retributivo, Contributivo and combined.

• Retributivo is based on the salary received five years before retirement.  
• Contributivo is calculated based on the amount transferred to the Social Insurance Fund.
• Combined – combines both calculation methods.

Required contributions

The use of approaches to calculating pension payments is related to the date of a person's employment. Until 12/31/1996, the Retributivo algorithm was used. The government applied the coefficient to the average annual income of the employee. So, if a person received up to 48,000 euros per year, his coefficient was equal to 2%. If his salary exceeded 48,000 euros per year, the coefficient dropped to 0.9%. In 2024, the method continues to be used for citizens who got a job before the expiration of this law.

After the legislative changes that took place in 1996, the Italian Government began to apply the Contributivo method, taking into account the amount of social contributions. The calculation takes into account the salary of a person, to which a standard coefficient of 33% is applied. Of this amount, 23.8% is transferred to the PF by the company, and 9.2% is transferred by an employee. The earlier a person retires, the lower his benefit will be.

A combined approach to calculation is used when a pensioner's social contributions are not enough to receive a minimum pension.

Pension reform

After the law changes in 2019, an Italian pensioner cannot receive less than 780 € per year. This amount is one and a half times higher than the minimum social benefit. In such cases, the state adds the missing amount to the person.

In 2024, Italy introduced an indexation coefficient of 5.4%, which increased the amount of pensions relative to 2023.

From the beginning of 2025, the government is going to cancel Quota 100 and Quota 103. According to them, in previous years, it was possible to receive benefits ahead of schedule at the age of 62 if there was a confirmed work experience of 41 years. Instead of these quotas, Quota 41 is expected to appear, which does not require an age reference (only an experience). The ambiguous attitude towards the upcoming innovation is due to the fact that the less work experience a person has before 1999, the higher the probability of reducing his allowance.