Italy’s CGIL union says new rules allowing workers to transfer pension savings between funds could leave them with substantially less at retirement, particularly if they move away from a collectively negotiated fund and lose their employer’s contribution. The portability rules took effect on October 31.
The union’s pension observatory compared negotiated funds, open pension funds and individual insurance-based pension plans, using average cost indicators from Covip. Its simulation assumes a worker earns €30,000 gross per year, contributes €2,373 annually through severance pay and personal payments, and receives a 4% annual return before costs across all three options.
After 35 years, the projected balance is €165,925 in a negotiated fund, €135,157 in an open fund and €121,553 in an individual pension plan. CGIL calculates that choosing an open fund would mean €30,768 less than staying in a negotiated fund, while the difference for an individual plan would be €44,372. The union attributes the gap to higher costs, which also reduce the returns earned on accumulated savings.
A second scenario includes an annual employer contribution of 2%, or €600, paid only into the negotiated fund. Under those assumptions, the projected balance after 35 years reaches €207,878 in that fund, compared with €135,157 in the open fund and €121,553 in the individual plan. The resulting gaps are €72,721 and €86,325, respectively. CGIL says these differences reflect both costs and the loss of employer contributions and their potential returns.
The dispute concerns whether the new rules allow employer contributions to follow workers into open funds and individual plans. CGIL, CISL, UIL and 12 employers’ associations argue that collective agreements continue to determine where those contributions must go. CGIL also called for clear information about the financial consequences of transferring pension savings. Its confederal secretary, Stefania Filetti, said that moving an individual pension position does not automatically carry with it the right to the employer contribution.
Sources: La Repubblica.