Franco, Daniele --- "Pension reform: what lessons from Italy?" [2003] ELECD 112; in Tumpel-Gugerell, Gertrude; Mooslechner, Peter (eds), "Structural Challenges for Europe" (Edward Elgar Publishing, 2003)

Book Title: Structural Challenges for Europe

Editor(s): Tumpel-Gugerell, Gertrude; Mooslechner, Peter

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843764748

Section: Chapter 12

Section Title: Pension reform: what lessons from Italy?

Author(s): Franco, Daniele

Number of pages: 23

Extract:

12. Pension reform: what lessons from
Italy?
Daniele Franco

1. INTRODUCTION1

The reform of the pension system is on the political agenda of most
European countries. There is a widespread need to adjust pension policies
to new demographic and economic conditions while safeguarding their
essential achievements. Pension reform is particularly important in Italy,
where it is at the core of the effort to ensure fiscal consolidation and long-
term fiscal sustainability.
In Italy pension spending is proportionally higher than in any other
western industrial country (15 per cent of GDP in 2001) while the fertility
rate is among the lowest (about 1.2 children per woman of childbearing
age). The ratio of the elderly (65 years and over) to the working age popu-
lation (20 to 64 years) is expected to increase from 29 per cent in 2000 to
about 40 per cent in 2020 and 69 per cent in 2050; this ratio will be among
the highest in the world. These problems are compounded by the high
public debt, which requires Italy to run sizeable primary surpluses in order
to comply with the fiscal rules introduced for European Monetary Union.
Pension reform is also an important component of any policy aimed at
improving the functioning of the Italian labour market, namely at increas-
ing the present low participation rate. Since the share of pensions in total
social spending is very high (70 per cent), pension reform is moreover a pre-
condition for implementing policies which may increase public support ...