Pensions: the thirty-year war against the younger generations

Il Campo largo calls for people to ‘listen’ to the young people’s protests before condemning the acts of urban guerrilla warfare unleashed by ‘infiltrators’. This is a peculiar stance, given that, at the same time, ‘progressive’ forces are pushing ahead with proposals for a ‘counter-reform’ of the pension system – including the revision of conversion coefficients or the raising of the state pension age – which penalise the younger generations.

This is not a new development, but rather a continuation of the welfare policies of the last thirty years. The large-scale diversion of resources towards pensions took place as part of the ‘mother of all reforms’: the Dini/Treu Act of 1995, which established a reallocation of contributions in favour of the Employees’ Pension Fund (Fpld). The Fpld contribution rate rose from 27.5 per cent to 32.7 per cent in 1996. To avoid increasing labour costs, the law restructured social security contributions whilst keeping the overall burden unchanged: the rate for the Family Allowance (ANF) fell from 6.2 to 2.48 per cent and that for maternity benefits from 1.23 to 0.66 per cent. At 1996 prices, the reduction in funding amounted to 4.6 billion euros for the ANF, 0.6 billion for maternity benefits, and 1.4 billion for nurseries and social housing. Total: 6.6 billion. The CEI – in an essay entitled “Il cambiamento demografico”, published by Laterza – documented that between 1996 and 2010, the reallocation of resources intended for families had financed the pension system to the tune of, at 2008 prices, approximately 120 billion euros. But that is not enough.

The unrest and protests today concern the right to housing, particularly in large cities. The issue is complex, but there is certainly a lack of structural funding for social housing. There used to be a contribution of 0.70 per cent, split equally between employees and employers, known as the ‘ex-Gescal’ (named after the institution responsible for managing social housing). This levy, too, was used to reach the ‘magic’ threshold of 33 per cent for the pension contribution rate for employees, compared with an OECD average of 18 per cent.

Also as part of the Dini reform, a mechanism was introduced for determining pension entitlements under the contributory system; however, this did not apply to those who, by the end of 1995, had accrued at least 18 years of contributions. For those to whom the new calculation applied, the pension would be calculated as the product of the individual contribution balance and a conversion coefficient updated, according to actuarial criteria, to reflect the chronological age at retirement or the increase in life expectancy. Essentially, if people live longer – and therefore receive a pension for more years – the conversion coefficient is reduced (and with it, the pension payment). Since 2012, the Fornero reform has extended the application of conversion coefficients, at least in part, to everyone in order to ensure the sustainability of the system in the face of demographic trends.

During the 2026 budget session, the mechanism for indexing pension eligibility requirements to increases in life expectancy came under fire from those seeking to dismantle the pension system: the mechanism had been suspended by the first Conte government and was reinstated in 2025. Last year, the affair ended with a costly settlement (1.6 billion): an increase of one month in 2027 (instead of three) and a further two months in 2028, accompanied by the threat of a showdown in the 2027 budget. Calls for abolition backed by the Lega were joined by the Campo Largo coalition, which, through a policy statement, committed the government “to take steps to review, as soon as the first appropriate opportunity arises, the decision to raise the age requirements for retirement and to abolish the mechanism for periodic review”. The indexation rules have been in force since 2010. They were applied, without provoking any protests, in 2013, 2016 and 2019, with the eligibility requirements being tightened by three, four and five months respectively.

In recent days, whilst the announced offensive against this mechanism was being awaited, another farce of misunderstandings has erupted. The CGIL has led the unsuspecting members of its allied parties to believe that, from 2027, there would be a cut in allowances as a result of the new, reduced coefficients. This was an allegation made in complete bad faith, because the updating of the coefficients is a technical decision (based on ISTAT data) rather than a political one, and one which has never been suspended, not even at times when other rules were suspended (it had even been applied to the ‘Quota 100’ scheme for those aged 62). Furthermore, in that policy document, it was precisely the revision of the coefficients that – in the view of the Campolarghisti signatories – rendered the increase in the retirement age pointless.

This leads to the notorious scam currently underway, which combines the two effects of indexation and revision to the detriment of workers, when, as the State General Accounting Office has emphasised: “The mechanism for automatically adjusting minimum requirements in line with changes in life expectancy counteracts the reduction in pension amounts that would otherwise have occurred – assuming the retirement age remained the same – precisely as a result of the revision of the transformation coefficients”.