It had already been planned but not enough was done to prevent the pensions were lower due to the negative contributions accrued with INPS in the last five years of the Italian GDP.
Which mechanism is triggered
The current situation is the following: if it is true that there is a mechanism that “brings negative revaluation to zero“(as stated in the Sole24Ore), the first positive coefficient will suffer a reduction of 0.0215% according to the forecasts for the current year. If the current regulations are not handled, we cannot know what the final impact will be and will depend on the recovery that will take place starting from this year and for the next ones: either it will be “sustained” or this coefficient could be even more towards the bass. As we dealt with recently, one note Istat said that “The compound average annual rate of variation of the nominal gross domestic product, in the five years preceding 2021, is equal to -0.000215 and, therefore, the revaluation coefficient is equal to 0.999785. It should be emphasized that the revaluation coefficient is less than unity, due to the negative dynamics of nominal GDP in the period considered“.
Italy, alas, is not new to such situations: already in 2014, in fact, the revaluation index of the amounts was negative forcing the government to intervene with the decree law 65/2015 which established, however, that even in the presence of a negative rate this could not be less than 1 and was then recovered in subsequent revaluations . According to the provisions of article 5 paragraph 1 of Legislative Decree number 65 of 2015, at that point, the clause safeguard that raises the value to unity.
What to fear
The main problems related to the negative coefficient that lowers the net value of pensions are two: the first is related to the final benefit that the institution will be able to guarantee. For now, the projections pensions see an increase in annual GDP of 1.5%, very far from those values recorded in recent years. In this way, with lower rates, pension “numbers” will be lower than expected and may not be in line with what workers expect. Another alarm bell, then, concerns the sustainability of the system: the financing that is in use at the moment is on the distribution but the contributory method does not give any reliance that there is a “future financial balance“.
As a result, the income was reduced
According to the data contained by INPS in the “XX annual report”, the enter contributions of the Entity have drastically reduced: from less than 236 billion euros for 2019 to about 225 billion in 2020 with an increase in benefits, however, of 2.5%. “Public spending on pensions has therefore reached a level between 16 and 17% of GDP, well above the average of the European Union countries and public transfers to INPS, in such a context, have increased by about 30 billion. of Euro“. As an expert told Giornale.it,” In 2021 pensions were not revalued because inflation provisionally forecast for 2020 was negative. In 2022, it is assumed, it will also go up because the cost of living rate will be at 1.5%. The quantification of the increase as a revaluation depends on the method that the government decides to follow for the equalization “.