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Italy: New and extended early retirement options under social security

Retirement
N/A

April 24, 2019

To stimulate turnover in the labor market and reduce youth unemployment the Italian government is providing incentives for employers to encourage early retirements.

Employer action code: act

In order to stimulate turnover in the labor market and reduce youth unemployment (33% in January 2019, second highest in the EU after Greece), the Italian government has introduced the Quota 100 plan, an experimental measure that will allow employees age 62 with 38 years of service to take early retirement and receive benefits from social security (managed by INPS, the National Social Security Institute). Moreover, existing temporary early retirement options have been extended. It should be noted that from 2019, normal retirement age (NRA) under INPS is 67, although a full pension is also payable regardless of age after 42 years and 10 months (male) or 41 years and 10 months (female) of contributions. In combination with these measures, new government incentives were initiated to encourage hiring of younger employees.

Key details

The following early retirement options are available:

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Type Eligibility Benefit Optional incentive payable by employer Union agreement required? Available for retirements during
Quota 100 Minimum age 62 with at least 38 years of contributions; payable after a three-month waiting period, at the earliest on April 1, 2019 Reduced early retirement pension payable by INPS Compensation for reduced INPS benefit due to shorter contribution period No 2019 – 2021
Opzione Donna Female employees, minimum age 58 with at least 35 years of contributions; payable after a 12-month waiting period Reduced early retirement pension payable by INPS (Partial) compensation of INPS benefit reduction resulting from full application of contributory method, which may be as much as 40% No 2019
Arduous jobs Minimum age 61 and seven months, with at least 35 years of contributions; at least half of career, or seven years in last 10, in arduous employment; no waiting period Reduced early retirement pension payable by INPS Compensation for reduced INPS benefit due to shorter contribution period No 2019
Isopensione In companies with more than 15 employees; from seven years before normal retirement age Early retirement benefit payable by the employer, who also continues to pay social security contributions No additional incentive; employer already pays the early retirement benefit Yes 2018 – 2020 (thereafter, from four years before normal retirement age)
APE volontario Minimum age 63 with at least 20 years of contributions Employee takes a loan to finance early retirement; reimbursed in 20-year installments, deducted from future INPS retirement pension; tax advantaged Compensation for reduced INPS benefit due to shorter contribution period No 2019
RITA Be eligible for APE volontario and be either employed and within five years from NRA, or have been unemployed for at least 24 months and be within 10 years of NRA Temporary annuity — advance on employer-provided pension (TFR or other); can be combined with APE; tax advantaged Compensation for reduced INPS and employer-provided benefit No 2019

Employer implications

Employers that wish to encourage early retirements and take advantage of government incentives to hire younger workers should consider the use of one or more of the above options but should carefully examine the cost implications.

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