ITALY - By the beginning of September, the government and the social partners will announce whether the Trattamento di Fine Rapporto (TFR) reform is to be brought forward to 2007.
This reform, postponed to 2008 by the previous government, should encourage workers to transfer their termination indemnity payment (TFR) into a pension fund.
This payment was historically made by an employee’s company into a TFR fund on their behalf.
Unions have been calling for the reform to be brought forward and meetings are currently being held with the government in this regard.
If the reform is introduced in 2007, pension funds will have to scramble to adhere to the new investment and administration regulations. In September, therefore, there could be considerable movement in the pension industry.
The guidelines for pension funds were published by the regulator - Commission Vigilanza dei Fondi Pensione (COVIP) just one week ago.
“A decision should be announced either before August recess, if not definitely in the first 20 days of September,” a spokesperson for Italian pension fund Arco said.
Another bone of contention regarding the reform was the three-year retirement age hike it will bring with it.
Dubbed the “scalone” this will see the retirement age rise from 57 to 60. Several of the social partners including the most prominent trade unions have demanded the scalone be eliminated.
Labour minister, Cesare Damiano, however declared without the scalone, the pension system would loose e4bn. This is therefore another issue being discussed and will have to be resolved if the reform is brought forward.
By Angele Spiteri Paris
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