Budget Law 2023: Changes in pensions

18 January 2023

On 29 December 2022, Law no. 197/2022 “The State Budget Forecast for Fiscal Year 2023 and Multi-Year Budget for 2023-2025 (hereafter, “Budget Law”) was published in the Official Gazette. The new social security regulation extended some provisions and adjusted others, pending the system’s 2024 reform.

Early retirement “Quota 103”

Article 14 of Decree Law no. 4/2019, converted into Law no. 26/2019, experimentally introduced early retirement with the “Quota 100” system from 2019 and until 31 December 2021, with 38 years of contributions and 62 years of age. In 2022, the above requirement was raised by two years and early retirement under the quota system could be completed by 31 December 2022 with “Quota 102”, based on the age requirement which was raised from 62 to 64 years.

From 2023 and for an experimental year, the Budget Law introduced the “Quota 103” pension, replacing Quota 102, for members of all social security schemes, except members of the Social Security Funds for professionals, who are at least 62 and have accrued a contribution period of at least 41 years, and can meet these requirements by the end of the year.

The recipients are employees or self-employed workers enrolled in the exclusive and substitute version of the General Compulsory Insurance (‘AGO’) managed by INPS – i.e., show business, professional sportsmen formerly ENPALS and journalists formerly INPGI – and those enrolled in the Separate Management Scheme. The contributions required to reach 41 years of seniority are those enrolled in the above management schemes, including any combinations, without prejudice to the additional requirement of 35 years of contributions for the right to a pension, from which periods of illness and unemployment are excluded.

For those who meet the requirements, following an application, the general rule is that the effective date starts from the first day of the month following the opening of the “timeframe”, which starts three months after fulfilling the requirements. More specifically:

  • members of the pension schemes who have accrued the requirements by 31 December 2022, can receive their pension benefits from 1 April 2023, while
  • those who meet the requirements from 1 January 2023, can receive their pension benefits three months after the date they meet the requirements, and the starting date will be the first day of the month following the opening of the timeframe.

Under the regulation, the amount paid for early retirement may not be more than five times the minimum allowance. The maximum gross monthly amount that can be disbursed cannot exceed €2,818.70. When the age requirement to access the old age pension is reached, (67 years), the amount payable will be adjusted to the amount accrued at the time the “Quota 103” is accessed.

The regulation states that the early retirement allowance cannot be combined, from the day the pension takes effect and until the fulfilment of the requirements that give access to the old age pension, for self-employed and employed income earned in the country and abroad, except for income deriving from occasional self-employment, up to annual €5,000 gross.

Opzione donna (Benefits for women)

Contrary to the Quota 103, the entry into force of the Budget Law has radically changed the rules to access Opzione donna compared to those in force in 2022.

The Budget Law did not extend this method of leaving work under the same terms as the previous extension, i.e., with 35 years of contributions and an age of 58 for female employees and 59 for self-employed workers. It changed the age requirement and introduced additional subjective requirements.

Under the new provisions, female workers who are 60 and have accrued at least 35 years of contributions by 2022 are eligible for opzione donna. The new legislation simplified the age requirements by eliminating the difference between self-employed or employed. Moreover, the age requirement could be reduced to 59 years if the worker has one child and 58 if they have at least two children. 

The change introduced by the Budget Law is that applicants must fall into one of the following categories, even if the contribution and age requirements are met:

  • at the time of the application and for at least six months, they must assist a spouse or cohabiting first-degree relative with a serious disability (Article 3, paragraph 3, of Law no. 104/1992) or a cohabiting second-degree relative or relative-in-law, if that person’s parents or spouse are at least 70 years old or suffer from disabling illnesses, or are dead;
  • they have a reduction in working capacity, established by the commissions for civil invalidity, equal to or greater than 74 per cent;
  • they have been made redundant and are employees of a company in financial crisis.

The previously applied calculation methods are unchanged. For monthly pension calculation purposes, the contribution calculation criteria will be applied even if the applicants would be entitled to the mixed method based on seniority. To receive the monthly allowance, 12 months must elapse between the accrual of the right and the pension start date for female employees and 18 months for those with mixed or only self-employed contributions.

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