Foreign Pensions in Italy
Information about contributing to a pension abroad from Italian salaries
1. SOCIAL PROVISIONS AND LABOUR LAW REQUIREMENTS
Legislative Decree of 5 December 2005, no 252, as modified by Law no 296/2006, Legislative Decree no 28/2007, Law no 244/2007 and Law no 247/2007. In particular, Article 15, paragraphs 4, 5 and 6 of Decree no 252 sets out the provisions to be applied to IORPs established in other EU Member States and wishing to provide cross-border services in Italy. The Minister of Labour has the power to establish further requirements of social and labour law to be applied to guest IOPRs, in agreement with the Minister of the Economy. This power has not been used so far.
The Pension Statutory Authority (‘COVIP’) has published a briefing note (last updated in December 2010) regarding the ‘Rules applicable in Italy to the cross-border activities of IORPs established in other Member States of the European Union.
2. TYPE OF PENSION SCHEMES
There are two types of pension schemes based on collective bargaining agreements (the so-called ‘second pillar’):
close-ended (a ‘Fondo Pensione Chiuso’, ‘FPC’) which is restricted to particular companies, groups or categories
open-ended (a ‘Fondo Pensione Aperto’, ‘FPA’) which is open to everyone (including individual members).
There are also two types of pension schemes which are not based on collective bargaining agreements (the so-called ‘third pillar’):
personal agreements, and
personal life insurance.
3. COMPULSORY MEMBERSHIP AND CONTRIBUTIONS
There is no compulsory membership or compulsory contributions. Generally, pension schemes based on collective bargaining agreements are financed by the employee’s TFR (employment termination payments), employer contributions or by both employer and employee contributions.
4. MEMBER INVOLVEMENT IN MANAGEMENT
In an FPC the board of directors, as well as the supervisory board of the scheme, must be composed of an equal number of representatives of the parties to the collective bargaining agreement (e.g. equal representation of employee and employer representatives), both where the pension scheme is funded by employer and employee contributions and where the scheme is funded only by employer contributions.
In an FPA there is no member involvement in management.
5. SETTING UP AND MODIFYING A PENSION SCHEME
Pension schemes are established under:
collective bargaining agreements, including those on a company level, or, in the absence of these, agreements between employees
agreements between groups of self-employed or professional workers
company regulations or
Pension schemes can be modified in the same way in which they were established.
6. INFORMATION REQUIREMENTS
Members have to be informed in writing at least once a year of the total assets of the pension scheme along with details of their prospective benefits (including contributions paid and interest earned).
A report on the financial results of the pension fund’s asset management must be made available to all members.
7. VESTED RIGHTS
In a defined contribution scheme (there are no defined benefit schemes in Italy) there is no minimum guarantee, except in the case of TFRs which must guarantee a return on the capital investment.
Final benefits depend on the capital value of contributions paid together with investment returns.
Benefits will vest at the normal retirement age (the same retirement age as is provided in the social security system), with a minimum of five years of membership.
On leaving a scheme before this time, employees lose their rights.
8. PORTABILITY OF RIGHTS
Employees have the right to redeem their own contributions (and contributions paid by the employer on their behalf) if they no longer meet the conditions for membership (for example, because of a change to the collective bargaining agreement or a change to the employee’s activity).
Moreover, employees can redeem the amounts accrued after two years from joining the pension scheme.
Members may transfer their vested rights to another pension scheme provided certain conditions are met.
9. RETIREMENT AGE
The retirement age is 60 years old for women and 65 for men. The earliest time that pension benefits can be paid out is generally after 20 years of contributions.
In the case of early retirement, currently (from 1 January 2011 to 31 December 2012), the requirements are as follows:
• for those aged 60 years, 35 years’ worth of contributions is required or generally, irrespective of age, 40 years’ worth of contributions is required