Pensions, cut for 500 thousand checks: GDP effect

Pensions, cut for 500 thousand checks: GDP effect
Pensions, cut for 500 thousand checks: GDP effect

The formalization came about ten days ago with a note from Istat: the collapse of the economy in 2020 will have an indirect and certainly undesirable effect on the pensions of those who leave their jobs starting next year. The parameter that comes into play is the capitalization rate of the contribution portion of the pension, which is precisely linked to the trend of the gross domestic product in a previous period of five years: we are talking – it should be specified – of the new checks and not of those already in place. The mechanism is based on a long period precisely to absorb and cushion the negative effects of a single year of recession: but the fall in GDP in 2020, reaching 9 percent, was so intense that it even resulted in a slightly negative rate, precisely 0.0215%. It means that the total contributions paid by workers before being transformed into an annuity would suffer an equal reduction. However, this will not happen, because a law of 2015 (a similar case had occurred at the time) provides that the revaluation of the amount cannot be negative and therefore will be null, equal to zero.

Pensions, the dynamics

All right then? Not really, because the negative dynamics of the economy will in any case lead to a loss on retirement – all other things being equal – compared to that of those who left their jobs this year (still calculated on the basis of GDP up to 2019) and what the same people would have received with a “normal” economy. In this virtual comparison, the reduction is limited but not imperceptible: milder for those with the allowance calculated with the mixed system, for which the contribution affects only the portion accrued from 2012 onwards; a little more consistent for retirees (fewer in number) who, on the other hand, have pure contributions. In the latter case, the reduction on the gross amount is approximately 1 per cent.
The same negative effect will carry over at least in part for those who leave in 2023, even in the presence of the rebound in GDP, because the capitalization rate will still be slightly above zero and lower than what it would have had in the absence of the exceptional Covid recession. : the cut could be close to 2 per cent for “pure” contributions. The audience touched next year, in a more or less intense way, is that of the new pensions that will be liquidated: there are about 500 thousand excluding social allowances and survivors’ benefits, not affected by this calculation.

The recovery

As mentioned, the law provides for the cancellation of any negative rate with financial coverage borne by the State. But this intervention should then be recovered on the revaluations of the following years. In 2015, the government decided to give up this “payback” for the state budget, which was still worth a few million a year. The same hypothesis is also taken into consideration this time and could be concretized in the Budget law, in the pension chapter which will include the rules for exceeding Quota 100.

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Pensions cut thousand checks GDP effect

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