Ageing and Pension Reform Around the World

Evidence from Eleven Countries

Edited by Giuliano Bonoli and Toshimitsu Shinkawa

This book comprehensively documents developments in pension policy in eleven advanced industrial countries in Western Europe, East Asia and North America. In order to explore what population ageing means for the sustainability of pension systems, the authors present a detailed review of pension policy making over the past two decades and provide up-to-date analysis of current pension legislation. They examine the factors that can facilitate or impede the adaptation of pension systems and the features that shape and determine reforms. They also highlight the fact that although the path of reform taken by each country is somewhat different, the processes at work are often very similar.

Chapter 2: Reconfiguring Italian Pensions: From Policy Stalemate to Comprehensive Reforms

Maurizio Ferrera and Matteo Jessoula

Subjects: economics and finance, public finance, politics and public policy, public policy, social policy and sociology, ageing, comparative social policy, economics of social policy

Extract

1 Maurizio Ferrera and Matteo Jessoula 1. INTRODUCTION Italy experienced an early start in the field of pensions, introducing in 1919 a compulsory funded scheme for all the employees whose earnings were under a certain threshold. The system was built according to the Bismarckian model, along occupational lines. The subsequent evolution of the Italian pension system was similar to that of many Bismarckian countries, and followed two major directions: 1) coverage extension to protect all categories of workers (farmers 1957; artisans 1959; dealers-shopkeepers 1966); 2) introduction of a basic means-tested scheme aimed at preventing poverty in old age (1969). Moreover, in 1969 the original funded system was eventually replaced by a fully PAYG one. The same year was crucial for the level of old age pensions, as Law 153/69 modified the earnings-relating method of benefits calculation introduced one year before (Law 238/68), making it more generous (80 per cent of earnings after 40 years of insurance). The result of such expansive interventions was a high increase of pension expenditure relative to GDP – which passed from 4.5 per cent in 1960, to 6.8 per cent in 1970 and 10.8 per cent in 1980 (Ministero del Tesoro, 1981) – and huge unbalances in the accounts of INPS2 and other autonomous funds. In fact, the shift from a funded system to a PAYG one, the expansion of coverage and the increase in the generosity of benefits took place in many well-developed nations during the post-war period, yet in Italy pension policy assumed peculiar traits....

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