Observatory

Pension funds and advances against TFR (Italian termination benefits)

27 September 2010

The recent reforms in pension laws, the most recent introduced with Italian Legislative Decree no. 78/2010 have made restrictive modifications to the rules for obtaining a pension and sharp decreases in the amount of the benefit.

The recent reforms in pension laws, the most recent introduced with Italian Legislative Decree no. 78/2010 have made restrictive modifications to the rules for obtaining a pension and sharp decreases in the amount of the benefit.  The insufficiency of the pension system resulted in the adoption of policies for the development of a so-called “second tier”, meaning supplementary pension funds, financed with the entire amount of the termination benefits of the registered workers. However, it is necessary to underline that the law has set up a series of services to be provided by pension funds to assist workers experiencing financial difficulties (purchase of the main dwelling for the worker and his/her children, medical expenses and other unspecified expenses up to a limit of 30%). In fact, in a similar manner to what occurs with TFR it has been established that, if certain conditions occur, the fund advances to workers part of the accumulated amount, which can be later reinstated in order not to completely compromise its main function. In addition, before retiring, it is possible to include situations for pension purposes and for a nominal payment such as termination of a job with unemployment between 12 and 48 months, or if the employer used redundancy or unemployment schemes.

(Il Sole 24 Ore)

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