The government’s gallery of pension horrors
A measure introduced in the 2025 budget provides that workers hired from January 1st can pay up to 2 percent of their salary to INPS, as an additional contribution, with a 50 percent deduction of these amounts. The logic is known: to feed the enormous tap of pay-as-you-go pensions, increasingly open but less and less fed from the upstream source, i.e. from contributions. This drying up derives from demographic reasons.
On pensions the government surrenders to Fornero
We have long since reached the end of the line of contributory pressure without fueling escapes towards the underground economy. Furthermore, it is by no means guaranteed that this additional supply will be segregated from social security spending in the strict sense: the INPS is a huge lake with massive outflows of a welfare nature. Therefore nothing prevents the newly injected liquids from flowing into extraordinary layoffs and similar disbursements.
The law does not say how these contributions will be used. Which fund will they be paid into? What will their return be, at what rate will they be capitalized? Everything is delegated to a subsequent decree of the Ministry of Labor and Social Policies in agreement with the Ministry of Economy. A very important decision is thus delegated to the government, taking it away from Parliament, in general silence.
Tito Boeri and Mario Padula
This country is governed, for the future, through inter-ministerial implementing decrees: nothing new under the sun. The idea of the policy is to put the INPS in a position to capture growing resources, to compensate for the adverse demographic dynamics. Hence the expedient, which karstically resurfaces, of letting the INPS enter into the management of the so-called second social security pillar. Which however must be capitalised, not pay-as-you-go. Otherwise we return to the Ponzi scheme and the capture of resources to be immediately allocated to current expenditure, that of social benefits.
Who manages INPS money
But becoming savings managers cannot be improvised. INPS today limits itself to intermediating funds, therefore it should create an ad hoc management structure, with very high set-up costs, or delegate external managers. For information on how these things end, when water is scarce and the bottom does not float, see the FondInps entry.
At what rates would the additional contributions be capitalized? Capitalizing at rates set by law or at market rates with a minimum guaranteed by the State risks opening up chasms in the State’s accounts. If the rate set by law or the minimum is higher than the market rates, you end up promising more than you can actually give.
How can we ensure the same level of protection for the additional contribution to the INPS as is currently guaranteed for the contribution to pension funds? Governance issues inevitably come into play here. The INPS is subject to the supervision of the Ministries of Labor and Economy and it is presumable that the choices regarding the authority to guide the fund are eminently of a political nature, as happens in the appointments for the Board of Directors of the institute.
Think of an INPS fund that allocates the money collected to Italian companies, in the name of Made in Italy, perhaps with a public guarantee on a threshold rate equal to that of the TFR revaluation, as per the bizarre proposal already read in the recent past. Goodbye diversification, that thing that requires you not to put all your eggs in the same national basket, with all due respect to those who, in recent years, have decided that international portfolio diversification.
Contributions to the homeland
I’d say that’s enough for a gallery of horrors. We await the interministerial decree, aware that this additional contribution is unlikely to be large. But the problem remains: demographics are hitting harder and harder, politics doesn’t intend to take note of it. And then there are those who have to keep foolish promises, of the type “we will abolish the Fornero law” which in fact means precisely “we will abolish demography” (vaste programme) and have opened the first breach in the dam of the second pillar, which will contribute to the exits in advance for all pure contributors.
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