Edited by Giuliano Bonoli and Toshimitsu Shinkawa
Chapter 2: Reconfiguring Italian Pensions: From Policy Stalemate to Comprehensive Reforms
2. Reconfiguring Italian pensions: From policy stalemate to comprehensive reforms1 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...
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