A new ‘Quota 100’ scheme satisfies the Lega. But in the short term, it will place a burden on pensioners

Why, with the spread rising and BTP yields high, does the government wish to increase pension expenditure? The budget provides for a fund of nearly a billion for new early retirements: a scaled-down version of ‘Quota 100’, seven years on. The political explanation is straightforward: the Lega is demanding a result that its voters can recognise, and the coalition is seeking a compromise. The funds are being allocated today, with the details left for tomorrow. But there is something voters probably do not know. For years, the European Commission and the International Monetary Fund have been calling on Italy to curb pension expenditure. There is no rule requiring every euro of new pensions to be offset by a euro of pension savings. However, there is a sustainability constraint: when early retirement schemes are expanded, savings are often sought from pensions already being paid out. In its 2024 report on Italy, the International Monetary Fund points out that aligning the retirement age with life expectancy, the contribution-based system and temporary reductions in the revaluation of high pensions yield significant cumulative savings. It recommends avoiding new, costly forms of early retirement.

And here’s the catch: to fund new pension payments, the government could reduce the index-linked adjustment for those already in retirement. This is not mere speculation; the press reports that, alongside the new fund, the government is considering a further tightening of the indexation rules: full index-linked adjustment only up to four times the minimum pension, with a reduced rate above that threshold. The model is based on the 2023–2024 scheme.

This has already happened with ‘Quota 100’. In 2019, the first Conte government broadened the options for early retirement whilst simultaneously reducing the adjustment of the highest pensions. It was not a euro-for-euro compensation, but the distribution mechanism was clear: more spending for those retiring early, less for those already in retirement.

The first measure is highly visible. A new ‘Quota 100’ scheme is being announced, and the beneficiaries know who to thank. The second is almost invisible. No one is telling pensioners that they will suffer a permanent loss of purchasing power. The only thing being said is that the revaluation will be partial: the nominal pension payment will rise, but by less than the rate of inflation.

There is also a crucial technical detail. The standard pension adjustment system operates in brackets, like income tax (Irpef): the first portion of the pension is fully adjusted, whilst higher portions are adjusted to a lesser extent. In 2023–2024, however, the percentage specified for the relevant bracket was applied to the entire pension, subject to the safeguard clauses. In 2023, pensions between five and six times the minimum received 53 per cent of the revaluation; those more than ten times the minimum received 32 per cent, falling to 22 per cent in 2024.

The shortfall does not disappear the following year. Future increases are calculated on the basis of a lower pension: even a one-year cut has an impact for the entire duration of the pension. The temporary nature of the measure does not make the sacrifice temporary, nor does it automatically exempt it from review by the Constitutional Court.

How much does it cost? A 2025 study by Itinerari Previdenziali estimates that for a pension exceeding 2,500 euros gross per month, the two-year inflationary squeeze could result in cumulative losses of at least 13,000 euros over the following ten years; for higher amounts, losses could run into tens of thousands of euros, up to 100,000 euros in cumulative losses. A gross pension of 2,500 euros amounts to less than 2,000 euros net: these are not millionaire’s pensions. This has already happened in the recent past and will happen again this year. The real-terms decline in pensions of 2,500 euros today compared with 2012 stands at 21 per cent.

It is rightly said that early retirement is paid for by young people, as it increases the burden on future generations. But that is only half the story. In the short term, it is paid for by the elderly, through a reduced pension adjustment. The benefit is immediate and recognisable; the cost is spread out, cumulative and almost invisible.

One might wonder whether, had they been aware of this exchange, pensioners would find the promise of a new ‘Quota 100’ scheme just as appealing.

Marco Leonardi