Premier Matteo Renzi announced Monday that his cabinet has approved a decree that seeks to fix a headache created by a Constitutional Court ruling against a 2011 freeze on increases in higher State pensions. Renzi said that some 3.7 million pensioners will receive a one-time payout on August 1 after the court ruling last month. But unions and opposition parties immediately blasted the move as insufficient. In part, this is because the premier said people with State pensions of over 3,200 euros a month gross will be excluded.
He put the cost of the rebates at 2.18 billion euros, compared to the 18 billion it would have cost to give a full rebate to all pensioners.
“That would have mean taking funding away from nursery schools, infrastructure and workers,” Renzi said. He explained that, under his government’s pension repayment plan, cheques will vary according to an income scale with lower-income Italian pensioners receiving more.
For example, under the so-called Poletti plan – named for Labour Minister Giuliano Poletti – someone with a 1,700-euro monthly pension could receive a 750-euro reimbursement while a person with 2,700 euros monthly in pension payments would get about 278 euros. Renzi also promised that early retirement could be more readily available for those willing to take a pension cut. “Regulations of the past were too rigid,” on pensions and retirement but changes in the government’s budget stability laws will “give a little more room” for those who take a cut to retire early, he said.
The government’s decision to reimburse lower-income pension holders in line with the April Constitutional Court ruling has averted the EU’s infraction procedure over excessive deficits, Economy Minister Pier Carlo Padoan said Monday.
If all pension holders had been repaid, the budget-to-GDP ratio would have risen to 3.6%, triggering EU action, he added.
Padoan also promised that a “more generous” indexing of some pensions to inflation will become a permanent feature, lifting some pension incomes permanently.
Renzi explained that this means that: “in 2016 those who earn 1,700 euros (a month) will have a 180-euro rise, 15 euros a month. For those on 2,200 it will be 99 euros, those on 2,700 will have (an extra) 60 euros a year, five euros a month”. Padoan said the new pensions decree will affect any legal actions threatened over the new Poletti pension rules.
“I do not know if there will be (legal) appeals, but (if so) the appeals must take into account that, with this decree, things have changed,” said Padoan.
Numerous opposition politicians have demanded the government repay the full amount of pension money withheld under the 2011 decree.
Forza Italia leader Silvio Berlusconi said Monday that Renzi’s proposal to give a rebate of around 500 euros in average was “unacceptable”. “The Constitutional Court’s sentence was clear,” three-time premier Berlusconi said. “It’s necessary to pay back all the pensioners what was taken from them. Renzi’s initiative on the pensions is absolutely unacceptable”.
Italy’s second-biggest union, the CISL, blasted the proposed one-off payouts as “inadequate and insufficient”.
CISL’s Maurizio Petriccioli said the payouts would cover only one-sixth of the money owed to Italian pensioners.
Another big union, the UIL, said the government’s decree “does not respond to any of the indications contained in the Constitutional Court’s sentence”. Renzi hit back at the criticism, especially from parties who are demanding full rebates, having voted in favour of the original pension freeze, passed by the emergency technocrat government of Mario Monti at the end of 2011.
“We are here to correct the mistakes of others,” Renzi said, branding the criticism “ridiculous”.
Meanwhile, Northern League Secretary Matteo Salvini said Monday the party will take the Italian government to a European court of human rights over the 2011 administration’s pension reforms.
As well, consumer group Codacons said it would appeal the Renzi measure in the courts because it is not equally applied to all pensioners.