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Pensions and social security

SOCIAL SECURITY

By “social security” we mean the set of measures aimed at providing benefits for citizens in need. These measures range from free care for the destitute, to the establishment and integration of bodies and institutions ensuring that maintenance and social assistance are provided to citizens unable to work and lacking the means to live, and that workers are provided with adequate means for living in the event of accident, illness, disability, old age and involuntary unemployment.

Social security comprises:

  •  social assistance, which fulfils a general function of protecting the needy, extended to all citizens in case of need;
  •  social insurance, which fulfils the specific function of protecting workers.

Those entitled to protection are:

  • the employed and self-employed;
  • civil servants;
  • students;
  • pensioners;
  • family members and survivors of the above persons.

The main benefits with regard to employed and self-employed workers are the folllowing:

OLD-AGE PENSION: following the enactment of Law 335/95, the right to apply for an old-age pension is conditional on the worker having at least 20 years of contributions, 65 years of age for men and 60 years of age for women.

SENIORITY PENSION: following the enactment of Law 335/95, the right to apply for a seniority pension is conditional on the worker reaching at least 35 years of seniority, with at least 57 years of age or at least 40 years of contributions.

ORDINARY DISABILITY ALLOWANCE: the ordinary disability allowance is payable to a worker whose ability to work, in occupations suited to his or her habits, is permanently reduced by reason of infirmity or physical or mental defect to less than one-third. To be eligible for the allowance, the worker must have 5 years of insurance and contributions: of the latter, at least 3 years must have been paid in the 5 years preceding the application for insurance.
The allowance is recognized for the duration of 3 years and may be confirmed after a review by INPS upon application by the person concerned for periods of the same duration. After 3 successive awards, the allowance is confirmed permanently.
The ordinary disability allowance is not reversible to survivors.

ORDINARY DISABILITY PENSION: the ordinary disability pension is payable to the insured person who, due to infirmity or physical or mental defect, is unable to perform any work activity. To be eligible for the pension, the insured must be able to claim 5 years of insurance and 5 years of contributions, of which at least 3 years must have been paid in the 5 years preceding the application for insurance.
The pension consists of the amount of the disability allowance and a surcharge calculated on the basis of the contributions the worker would have earned if he or she had been able to continue working until retirement age.

SURVIVOR’S PENSION: the survivor’s pension is payable to the family members of the deceased worker and takes the name of “survivor’s pension” if the deceased worker was a holder of a direct pension or if the deceased worker was not a holder of a direct pension but at the time of death possessed the insurance and contribution requirements for obtaining the ordinary disability allowance or disability pension.
Family members entitled to the survivor’s pension are:

  • the spouse and children who are minors, students or disabled at the date of the worker’s death;
  • parents who on the date of the worker’s death are 65 years of age or older, do not have a pension and are dependents of the deceased;
  • in the absence of such beneficiaries, unmarried brothers and sisters who at the date of the worker’s death are incapacitated, do not hold a direct or indirect pension and are dependents of the decedent.

SOCIAL PENSION: the social pension is granted to citizens over 65 years of age (Italian or from a EU country) who are habitually resident in the national territory without any form of insurance protection and whose incomes, including those of their spouse, are lower than those established by law.

INTERNATIONAL SOCIAL SECURITY

By “international social security” we mean the social protection of nationals habitually resident in another country, guaranteed by international regulations. In the European Union, social protection is ensured and provided through the implementation of the EU Social Security Regulations, which are self-executing, i.e. immediately and directly applicable in the current 27 EU Member States.

Since June 1, 2002, these regulations have also been extended to the Swiss Confederation through a special agreement.

In the non-EU area, social protection is normally implemented and provided through bilateral Conventions.

For details please consult the INPS website (sito web dell’INPS).

COMMUNITY REGULATIONS

Community Regulations 1408/71 and 574/72, which have been expanded and updated several times, comprehensively regulate social security in relations between the countries of the European Union, the European Economic Area and Switzerland.
The Community Regulations dictate general rules for disability, old-age and death insurance (pensions), insurance against accidents at work and occupational diseases, against involuntary unemployment, for assistance in sickness and maternity, and for family benefits.
In addition, Community Regulations do not replace the legislations of member states, but regulate their application in such a way that workers who have worked abroad are not adversely affected compared to those who have only worked at home.

The Community Regulations were established to achieve the following objectives:

  • 20901. The totalization of all periods of insurance and contributions accrued in member countries, for the purpose of entitlement to benefits;
  • 20902. The payment of the pension in the country of residence, even if it is dependent on another member state;
  • Equal treatment with citizens of the country in which they work.

The beneficiaries are all employed and self-employed persons (including freelancers) who are nationals of member states; stateless persons or refugees provided that they reside in member states; family members and survivors; and civil servants.

Old-age, disability and death insurance, involuntary unemployment, and family allowances are guaranteed in all member states.

The application for a pension must be submitted to the institution competent for the territory of the state in which one is a resident, accompanied by the following documents:

  • periods of work performed in Italy;
  • names of the firms;
  • qualification of the worker;
  • INPS offices in Italy where pensions were paid;
  • workbook, pay stubs, letters of employment, dismissal, etc.

BILATERAL INTERNATIONAL CONVENTIONS

Similarly to the Community Regulations, bilateral international conventions are legal agreements under international law whereby the contracting states undertake the obligation to establish and coordinate a social insurance system that is reciprocal in nature and guarantees the free movement of labor by enshrining:

  • 20916. the equality of treatment in social security matters among all nationals of the contracting states;
  • 20917. the assimilation of territory in the sense that social security benefits cannot be affected by the fact that the beneficiary resides in a state other than the one from which he receives the benefit;
  • C. the totalization of insurance periods for benefit entitlement purposes.

The countries with which Italy has bilateral social security agreements are the following: Argentina, Bosnia and Herzegovina, Brazil, Canada, Croatia, Jersey and Channel Islands, Macedonia, Principality of Monaco, Republic of Cape Verde, San Marino, Slovenia, Serbia and Montenegro, U.S.A., Uruguay, Venezuela, Australia, Holy See, Switzerland, Tunisia, Israel and Libya.
As for Turkey, it is linked to Italy by the European Convention, which entered into force on April 12, 1990.
In addition, conventions with Chile, the Philippines, Morocco and the Czech Republic appear to have been signed but not ratified.

Partial social security agreements are also in effect:

  • The Italo-Mexican agreement concerning the transferability of pensions;
  • The agreement with Israel regarding temporarily posted workers, who remain fully subject to the legislation of their country of origin.

FEATURES OF THE BENEFITS FORESEEN WITHIN THE CONVENTION SCHEME

The aggregation of insurance periods is allowed provided that workers have a minimum period of insurance and contributions in the country granting the pension. If insurance periods are less than this minimum period, contributions are not lost, but used by the other state.
According to EEC Regulations, the minimum period is 52 weeks. For bilateral conventions, the minimum period is set differently in every convention.

“Prorata Temporis” refers to the system under which each state determines the amount to be paid in proportion to the contributions made within its own country.
For example, if a worker has at least 20 years of contributions in Italy, he or she is entitled to a national pension on an autonomous basis, without having to resort to the totalization of insurance periods.
Otherwise, when the years of contributions are fewer, it is necessary to resort to the totalization of contributions paid in Italy and in other agreed countries in order to accrue the right to a pension. In this case, the calculation of the pension is made in Pro Rata, that is, in proportion to the insurance periods accrued in the country that settles the pension.

“Minimum amount” means the monthly amount of pensions, which in pro rata cannot be less than one fortieth of the minimum pension in force on the date the pension takes effect, for each year of contributions credited in Italy. In 2003, the amount of the minimum treatment was 402.12 euros per month.

The “integration to the minimum treatment” is the supplement established by law, in addition to the pension share due to the insured person, in order for that share to reach a “minimum treatment.”

FISCAL ASPECTS OF PENSIONS

Italy has entered into special conventions with many countries to avoid double taxation. These conventions provide for the pension to be tax-free in the country of disbursement and taxed only in the country of residence.

Italy has signed conventions providing for de-taxation in the country of disbursement and taxation in the country of residence with the following states: Albania, Argentina, Australia, Austria, Bangladesh, Bosnia and Herzegovina, Belgium, Brazil, Bulgaria, Canada, China, South Korea, Ivory Coast, Croatia, Denmark, Ecuador, Egypt, United Arab Emirates, Russian Federation, Philippines, Germany, Japan, Greece, India, Indonesia, Ireland, Israel, Kazakhstan, Kuwait, Lithuania, Macedonia, Malaysia, Malta, Morocco, Mauritius, Mexico, Norway, New Zealand, Netherlands, Pakistan, Poland, Portugal, United Kingdom, Czech Republic, Federal Republic of Yugoslavia, Slovak Republic, Romania, Russia, Singapore, Slovenia, Spain, Sri Lanka, USA, South Africa, Switzerland, Tanzania, Trinidad Tobago, Tunisia, Turkey, Hungary, Soviet Union, Venezuela, Vietnam, Zambia.

PENSION COLLECTION

Intercountry pensions are collected through agreements concluded between INPS and the various banking institutions operating abroad in accordance with the terms of the agreements.

PENSION INCREASES

Refers to the increase in pensions provided for by the 2002 Finance Act in order to guarantee a monthly income of 516.46 euros for thirteen months per year.

When international conventions are signed, they also apply to pensions paid abroad. Since January 1, 2003, Italian citizens (who meet the legal requirements and after verification of income conditions) are entitled to pensions increases, such as to guarantee their own income.

PAYMENT OF INPS PENSIONS ABROAD

Pensions are paid to residents abroad every month. Pensions below a threshold established by law are paid every six months, as is the case for pensioners in Italy. Pensions are generally paid by crediting the related amounts to the pensioner’s current account.

Pension payments can be made by crediting the retiree’s bank account where this is provided for in an agreement between INPS and the banking institution.

In general, INPS checks are issued in the currency of the pensioner’s country of residence with the exception of some states with currencies not listed in the markets (such as Argentina, Brazil, and Venezuela) where payment is made in U.S. dollars.

Since February 2012 the payment of pensions abroad has been entrusted to Citibank.

The procedures agreed between INPS and Citibank for providing proof of life require the pensioner to complete and sign a “Certificate of Life Form’ (received from the bank at his / her home address), and have it notarised by the consular office or a public official authorized by the legislation of his / her country of residence and sent it to the bank. At the website www.inps.citi.com you will find all the necessary information, including a list of Public Officials authorised to authenticate the Certificate of Life in each country or geographical area, as well as telephone and email references dedicated to user assistance, which the parties concerned may also contact directly.

INPS AND CONSULAR OFFICES LINKS

In order to make the processing of files of those who have worked abroad more practical and easy, telematic links have been activated between INPS and Consular Offices abroad. Therefore, insured persons living abroad, by going to the Consulate, can draw any information pertaining to their insurance position with INPS in Italy and in particular any information on pensions.

APPLICATION OF SELF-CERTIFICATIONS IN THE FIELD OF SOCIAL SECURITY

As a result of the application of Law 127/97, Italian citizens residing abroad can significantly reduce the certifications required to obtain various benefits under conventional and non-conventional schemes, being able to replace them with their own self-certification statements.
Our compatriots residing abroad can send to the various national institutions (INPS, INAIL, Ministry of the Treasury, etc…) special declarations having the value of self-certification and attesting to various states, facts and personal qualities such as educational qualification, income, professional qualification, etc.