CMS Expert Guide to Pensions in Italy

Italy has a two-pillar pension system. The first pillar is a national insurance scheme funded by social contributions from employers and employees. The second pillar consists of private, voluntary supplementary pensions.

There are three main types of private pension provision:

1. contractual pension provision, or closed pension funds, set up by employers and trade unions in specific sectors;
2. open pension funds, set up and managed by banks, insurance companies and brokerage companies, which are open to all employees; and
3. individual pension schemes based on insurance contracts.

Private pension provision is not mandatory, but participation in the national insurance system is.

Closed pension funds are derived from National Collective Contracts and Company Collective Contracts and are established by employers. Open pension funds can be established by stockbrokers, banks or insurance companies.

Closed pension funds are self-governing legal entities. Open pension funds belong to whoever created them, but they have different and separate organs which control and operate them and which are established by their creators.

Closed pension funds are self-governing legal entities. Open pension funds belong to whoever created them, but they have different and separate organs which control and operate them and which are established by their creators.

Employees pay around 23% to 43% of their taxable income into the national insurance system, while the self-employed contribute around 24% to 26%. There are no mandatory contributions to private pension arrangements.Employees pay around 23% to 43% of their taxable income into the national insurance system, while the self-employed contribute around 24% to 26%. There are no mandatory contributions to private pension arrangements.

There are no funding requirements.

7. What age are benefits taken?

Starting from 1 January 2025, as a general rule it is possible to retire:

1. in the case of old-age pension, when an employee is at least 67 years old with 20 years of social contributions paid;
2. in the case of early retirement, when a male has 42 years and ten months of social contributions paid, or a female 41 years and ten months;
3. under Flexible Early Retirement (the so-called Quota 103), available to individuals aged 62 with 41 years of social contributions paid.

Where participants are employees, the amount of any contributions is determined by collective bargaining and can be paid by both employers and employees. In arrangements for the self-employed, the only source of funding is voluntary contributions from the employees.

There are no specific registration requirements for tax purposes (other than generally applicable requirements). 

Employees’ contributions to private pension schemes can benefit from personal tax relief of up to EUR 5,164.57 per year. Contributions paid by the employer on behalf of the employee are fully deductible from the employer’s business income for corporation tax purposes, as they are treated as an employment cost.

Investment returns in private pension schemes are generally taxed at a flat rate of 20%.

12. Are benefits taxed?

From 1 January 2007, benefits have been taxed at a at rate of 15%. This rate can be further reduced by 0.30% for each year of participation in the scheme in excess of 15 (with a maximum reduction of 6%). Transitional provisions regulate the taxation of benefits accrued up to
31 December 2006. The underlying principle for taxation of pensions
is that benefits should be taxed only so far as they relate to contributions which enjoyed tax relief when they were paid in, thus avoiding any double taxation of income. According to this principle, benefits are subject to tax in the hands of the recipient but the component of the benefit corresponding to the investment returns or to the contributions that exceeded the tax relief threshold are excluded from taxable income. 

No.

No, except in relation to the tax reliefs referred to above.

Pension funds are regulated by the pensions regulator, COVIP. It is responsible for ensuring transparency and the proper management and administration of pension funds. To this end, it authorises pension funds to carry out their activities, approves their by-laws and regulations, and oversees compliance with transparency principles in relations between pension funds and their members.

COVIP cooperates with public authorities and receives information from them, subject to confidentiality requirements.

There is no obligation for supplementary pension funds to guarantee either their capital or members’ interests, and the risk of failure or insolvency cannot be insured.

There are no specific requirements relating to pension funds, but general labour law prohibits discrimination on a wide range of grounds, including age, sex, race, and disability.

The rights of early leavers depend on the provisions of each fund. However, an employee always has the right to request up to 75% of their accrued rights if needed to cover medical expenses. After eight years of membership, an employee may also request up to 75% of their accrued rights to purchase or renovate their first home or that of their children, and up to 30% of their accrued rights to meet other needs.

There are no specific requirements.

There are no specific requirements.

Where an employee carries out their duties abroad, they may continue to make contributions in respect of such overseas service to an Italian pension arrangement.

Switching is permitted in specific circumstances, and the procedure depends on the provisions of each plan. An employee who has been a member of a pension fund for at least two years may voluntarily transfer their accrued funds to another pension fund.