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Published byJeffrey Powers Modified over 9 years ago
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The Social Security in Italy Project Communicate October 2006
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Law Social Security “1st pillar” Basic pension is covered by D.L. 503/1992 and L. 335/1995
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Financial structure Pay as you go
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Social security contribution Total percentage: 32,70% Of which: For employers 23,81% For employees 8,89% Of which: For social security benefits For assistance benefits
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The Income Tax on the annual salary From 0 to 26.000 23% From 26.001 to 33.500 33% From 33.501 to 100.000 39% Over 100.001 43%
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The impact Income Tax on the annual salary: EXAMPLE: ANNUAL SALARY 40.000 (23% TILL 26.000 = 5.980 + FROM 26.001 TO 33.500 (33%)=2.475 + FROM 33.501 TO 40.000 (39%)=2.535 Total=10.990 (average 27,47%)
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Typology of Benefits Life annuities
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Form of pension provided for 1. OLD AGE F 60 – M 65 2. SENIORITY AGE F and M 57 years old (from 01/01/08 60 years old) and 35 contribution years (years of job); Or, 39 contribution years (from 01/01/08 40 contribution years)
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Form of pension provided for 3. SURVIVORS’BENEFITS 4. DISABILITY
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The substitution rate The ratio between pension and the last salary is 80%
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Pension adjustment Indexation to inflation or cost of living
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State Pension expenditure 13,5% of GDP in 2001 it will rise to 15,7% in 2040 if no further reforms are taken
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SUPPLEMENTARY FUNDS (2 nd Pillar) THE 98,3% OF THE ITALIAN BANKS (2004) HAVE SUPPLEMENTARY FUNDS ARRANGEMENTS
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SUPPLEMENTARY FUNDS ARE: OPTIONAL COMPANY FUNDS
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TIPOLOGY OF FUNDS PENSION FUNDS
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SOURCES OF SUPPLEMENTARY FUNDS COLLECTIVE AGREEMENTS (NATIONAL LEVEL & COMPANY LEVEL) COMPANY REGULATIONS
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FINANCIAL SYSTEM DEFINED CONTRIBUTION FUNDED
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FINANCIAL SYSTEM CONTRIBUTION: TOTAL PERCENTAGE 4% FOR THE EMPLOYERS 2% FOR THE EMPLOYEES 2%
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FORM OF PENSION PROVIDED FOR OLD AGE: 1. AGE 2. CONTRIBUTION 3. DISABILITY 4. SURVIVOR’S BENEFITS 5. ILLNESS 6. LABOUR ACCIDENTS
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BENEFITS MIXED WHEN YOU RETIRED EXEMPTION OF CONTRIBUTIONS AND TAXATION OF INCOMES AND BENEFITS (2% Employer 2% Employee) In case of TERMINATION of the EMPLOYMENT RELATIONSHIP the WORKER can REDEEM HIS PENSION ENTITLEMENT or transfer HIS position TO ANOTHER FUND
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MAIN PROVIDERS Fund asset management is entrusted to qualified financial intermediares: savings, management companies, banks, stock brockerage companies and insurance companies
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Federazione Autonoma Bancari Italiani International & Projects Department “Communicate Project” October 2006
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