Overview of the Italian Pension System

This report provides a general introduction to the Italian pension system. To this end, firstly a contextual framework of the pension system is given by presenting Italian demographics and economic indicators. Secondly, the history of the system is analyzed, including the main reforms of the past two decades. After having determined the context, the public and mandatory first pillar of the pension system is discussed. The first pillar has traditionally been Italy's main pillar, providing generous replacement rates. The characteristics of the contributions-based scheme introduced in the 1995 reform are outlined, followed by a presentation of forecasted effects of the reform on public pension expenditure and replacement rates obtained. The reforms have changed the outlook for the younger generation of workers, increasing the importance of the complementary pillars. The voluntary second and third pillars are then thoroughly analyzed, by presenting both the theoretical and regulatory framework and market data. The report has been constructed in the context of the APG World of Pensions Scholarship. The aim is to provide an overview of the entire Italian pension system, with specific attention for the complementary pillars. In addition, literature is analyzed in order to identify recommended further steps. On a personal note, drafting this document has been useful in comprehending the current state-of-the-art of the pension system. Moreover, the report can be used as a general introduction to the Italian pension system by future participants of the Scholarship or others interested in this subject. This overview is not aimed to be a final product but should instead be frequently updated, as the system is constantly developing (especially now as pension issues are high on the agenda of policy makers) and new market data becomes available. All views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, APG and PensPlan.