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Italy, Pension reform

Monti’s attack on the Italian pension system is class war

Over the weekend a package of austerity measures were announced by Italian premier Mario Monti to reassure financial markets that have been betting on Italy defaulting.

Cuts to pensions featured large – raising the retirement age, eventually up to 70,  extending the minimum 40 year contribution period and ending cost of living indexation, for those on a pension over Euros 467 (£400) monthly.

The Government hopes that it will raise Euros 10 billion for the country’s cash-strapped treasury.

Monti has argued that the pensions system is unfair. It has “wide disparities in treatment” including between “categories of workers”, and with “unjustified privileges”, he has said.

But the measures his Government plans to implement will hit ordinary folk. And they do not address what is most unfair about the system, namely:

  • The pension scheme for salaried workers, INPS, is in surplus – Euros 5 billion are paid into the Treasury each year – and the scheme will be in balance until 2060.
  • The pension schemes of self-employed skilled workers (artigiani), farmers and trades people are in deficit to the tune Euros 9 billion annually
  • The pensions scheme for company executives is running at a deficit of Euros 2 billion/year
  • Salaried workers in INPS pay 33% of their pensionable pay in contributions, significantly more than the 21% paid in by others
  • Many bosses are dodging paying their dues – INPS has identified Euros 28 billion in unpaid employer contributions  
  • 8 million pensioners receive just 700 euros / month in pensions; some pensioners are so poor that they suffering from malnutrition and even going hungry
  • Top company executives receive a pension of Euros 50,000 on average. Enough to maintain that yacht and taste for fine wine and food into retirement

Behind the myth of a “generous” and “unsustainable” pensions system is provision in old age that favours some classes over others.

A fairer alternative

A fairer (and much simpler) system could be: 

  • A minimum pension of say 1,000 euros a month – to help eliminate pensioner poverty
  • A maximum pension of say 5,000 euros amonth – who needs more than that?
  • Harmonising pension age, contribution rates and method of calculating benefits, across all schemes (public and private, for self-employed and professionals) saving some Euros 4 billion a year
  • Ensuring all the different schemes are in balance, rather than making the salaried proletariat pay for the unsustainable pensions of tax dodging bosses and business people 
  • Link retirement age not only to life expectancy but to type of work  – if stressful, heavy manual or particularly alienating – and length of service
  • Maintain a right to a pension after 40 years – with mass unemployment and 40% jobless among the younger members of Italian society there are plenty of people to replace retirees
  • Make evasion of pension contributions a criminal offence –  that should stop it pretty quick

Such changes to the pension system would represent a genuine reform rather than the Euros 10 billion raid on security in old age to plug the hole in the national accounts, a hole not caused by il popolo.

Not revolutionary, but sensible and fair. 

This kind of pension reform is not likely to ever register on the radar of plutocrat premier Monti and his friends in the business and the global banking world.

But that won’t stop the Communists – who came up with these proposals – to campaign for them anyway.

More in Italian

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope

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