{"id":7623,"date":"2024-06-20T16:57:31","date_gmt":"2024-06-20T14:57:31","guid":{"rendered":"https:\/\/www.hrcapital.it\/observatory\/pace-contributiva-riscatto-dei-periodi-non-coperti-da-contribuzione\/"},"modified":"2024-06-24T09:03:05","modified_gmt":"2024-06-24T07:03:05","slug":"pace-contributiva-riscatto-dei-periodi-non-coperti-da-contribuzione","status":"publish","type":"post","link":"https:\/\/www.hrcapital.it\/en\/contribution-gaps-making-up-shortfalls-for-periods-not-covered-by-contributions\/","title":{"rendered":"Contribution gaps: making up shortfalls for periods not covered by contributions"},"content":{"rendered":"\n<p>In circular no. 69 of 29 May 2024, the Italian National Social Security Institute (<em>Istituto nazionale della previdenza sociale<\/em>, \u2018INPS\u2019) provided instructions on how to make up shortfalls for periods not covered by contributions for the two-year period 2024-2025. This is line with Article 1, paragraphs 126 to 130 of Italian Law no. 213 of 30 December 2023, (hereafter, \u20182024 Budget Law\u2019) that reintroduced this provision which had already been introduced, on an experimental basis, for the three-year period 2019-2021 by Italian Law no. 26 of 28 March 2019.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"683\" src=\"https:\/\/www.hrcapital.it\/wp-content\/uploads\/2024\/06\/accordo-shutterstock_694253248-1024x683.jpg\" alt=\"\" class=\"wp-image-7603\" srcset=\"https:\/\/www.hrcapital.it\/wp-content\/uploads\/2024\/06\/accordo-shutterstock_694253248-1024x683.jpg 1024w, https:\/\/www.hrcapital.it\/wp-content\/uploads\/2024\/06\/accordo-shutterstock_694253248-300x200.jpg 300w, https:\/\/www.hrcapital.it\/wp-content\/uploads\/2024\/06\/accordo-shutterstock_694253248-768x512.jpg 768w, https:\/\/www.hrcapital.it\/wp-content\/uploads\/2024\/06\/accordo-shutterstock_694253248.jpg 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h6 class=\"wp-block-heading\"><strong>Beneficiaries<\/strong><strong><\/strong><\/h6>\n\n\n\n<p>The following categories of people are eligible to make up shortfalls for periods not covered by contributions (also called \u2018contributions gaps\u2019) (i) employees with Compulsory General Insurance for disability, old age and surviving partners (<em>Assicurazione Generale Obbligatoria per l\u2019invalidit\u00e0, vecchiaia e superstiti<\/em>, \u2018AGO\u2019), or (ii) those who are enrolled special contributions\u2019 management fund for self-employed workers, or (iii) those who are enrolled in the Separately Managed Contributions fund for other workers (<em>Gestione Separata<\/em>), or (iv) those who have substitute and exclusive forms of AGO provided that they have <strong>not made sufficient contributions as of 31 December 1995 and are not already in receipt of a pension.<\/strong><\/p>\n\n\n\n<p>In summary, only those who will obtain a pension calculated entirely on contributions and who have made no additional pension contributions (mandatory, notional, from redemption) before 1 January 1996 to any compulsory pension management scheme (including professional pension funds) will then have the right to make up pension shortfalls.<\/p>\n\n\n\n<p>INPS has indeed clarified that if a person who makes a request to fill a pensions shortfall, for any reason, reaches a position where they have made sufficient contributions prior to 1 January 1996, the sums paid towards the shortfall will be returned and the payment will be automatically cancelled. Furthermore, this exclusion from the right to make up contribution gaps also applies to holders of direct pensions (in any compulsory pension management scheme).<\/p>\n\n\n\n<h6 class=\"wp-block-heading\"><strong>Contributions gaps, cost of making up shortfalls and potential employer intervention<\/strong><\/h6>\n\n\n\n<p>It should be highlighted that the INPS guarantees that contributions gaps can be made up only for the periods entirely uncovered by contributions falling between 1 January 1996 &#8211; 31 December 2023. This right is also extended to those who have not used it to make up shortfalls introduced previously by Italian Law no. 26\/2019 or to those who have used it, if the person eligibility requirements are met, for a maximum of five years.<\/p>\n\n\n\n<p>However, people who have periods of work for which no contributions have been paid remain explicitly excluded from the possibility of benefiting from the ability to fill contributions gaps. In this case, the worker can only use the so-called creation of a life annuity under the provisions of Article 13, Italian Law no. 1338\/1962.<\/p>\n\n\n\n<p>Furthermore, the periods that can be made up must fall between the year of the first and the last contribution credited to the INPS insurance schemes while it is not possible to make up contributions gap periods at professional funds.<\/p>\n\n\n\n<p>With regard to the cost, the INPS announced that the cost of making up contributions gaps is calculated under Article 2, paragraph 5 of Italian Legislative Decree no. 184\/1997, i.e. using the percentage method, applying the financing contribution rate in force on the date of submission of the application to fill the shortfall in contributions to the applicable Pension Management Scheme. The calculation is effectively based on the salary subject to contributions in the last 52 weeks prior to the transaction and correlates to the period for which contributions are being made. The payment can be made<strong> in a lump sum or in a maximum of 120 monthly instalments.<\/strong><\/p>\n\n\n\n<p>It is also essential to underline that the amount of contributions that the worker acquires through filling a contributions gap contributes to both the maturation of the right to a pension and its financial amount. In addition, the cost incurred in filling a contributions gap is tax deductible from overall income.<\/p>\n\n\n\n<p>It is of particular note that, in the private sector, the employer rather the employee can pay the contributions\u2019 gap.<\/p>\n\n\n\n<p>In fact, if the beneficiary\u2019s consent is obtained in advance, the employer can pay the employee\u2019s contribution gap by allocating any production bonuses due to employee and take advantage of the fact that it will be fully deductible from the company\u2019s income.<\/p>\n\n\n\n<h6 class=\"wp-block-heading\"><strong>Final thoughts<\/strong><strong><\/strong><\/h6>\n\n\n\n<p>The clarification provided by the INPS shows, on the one hand, the financial benefits of the scheme as it permits payment by instalment and the costs of adherence are deductible, and on the other hand, the possibility of early retirement, as being able to make up the gap is useful both for the accrual of the right to a pension and for its monthly amount.<\/p>\n\n\n\n<p><strong>Other related insights:<\/strong><br><a href=\"https:\/\/www.hrcapital.it\/en\/observatory\/exercise-of-optional-contribution-regime-buy-back-periods-determine-if-pre-conditions-are-fulfilled\/\"><a href=\"https:\/\/www.hrcapital.it\/en\/observatory\/exercise-of-optional-contribution-regime-buy-back-periods-determine-if-pre-conditions-are-fulfilled\/\">Exercise of optional contribution regime: buy-back periods determine if pre-conditions are fulfilled &#8211; HR Capital<\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In circular no. 69 of 29 May 2024, the Italian National Social Security Institute (Istituto nazionale della previdenza sociale, \u2018INPS\u2019) provided instructions on how to make up shortfalls for periods not covered by contributions for the two-year period 2024-2025. This is line with Article 1, paragraphs 126 to 130 of Italian Law no. 213 of [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[26],"tags":[371,204,285],"class_list":["post-7623","post","type-post","status-publish","format-standard","hentry","category-observatory","tag-contributi-en","tag-contribution-exemption","tag-inps-en"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Contribution gaps: making up shortfalls for periods not covered by contributions - HR Capital<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.hrcapital.it\/en\/contribution-gaps-making-up-shortfalls-for-periods-not-covered-by-contributions\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Contribution gaps: making up shortfalls for periods not covered by contributions - HR Capital\" \/>\n<meta property=\"og:description\" content=\"In circular no. 69 of 29 May 2024, the Italian National Social Security Institute (Istituto nazionale della previdenza sociale, \u2018INPS\u2019) provided instructions on how to make up shortfalls for periods not covered by contributions for the two-year period 2024-2025. 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