The Italian government’s preliminary calculations indicate that approximately five billion euros, before accounting for the automatic fiscal returns generated by the increases, will be required to revalue pensions in 2026 under current legislation.
This starting figure is based on the acquired inflation rate for 2025, which was reported at 1.7% in August. The total pension expenditure forecast for 2025, including social pensions, is approximately €355 billion. A full 1.7% adjustment applied unconditionally to the entire sum would necessitate over €6 billion. However, projected costs are estimated to fall to around €5 billion when applying the planned income-bracket system for 2025. This system grants a 100% revaluation for pensions up to four times the minimum benefit, 90% for those between four and five times the minimum, and 75% for amounts exceeding five times the minimum.
Based on 2023 data—the latest available—78.9% of pension beneficiaries receive a gross pension of less than €2,500, which is near the €2,394 threshold for a full revaluation. This group accounts for 56.7% of the total pension expenditure. Applying this percentage to the 2025 forecast, over €201 billion in pension spending would be eligible for the full 1.7% increase, requiring an allocation of over €3.4 billion. For the remaining €153.7 billion, a revaluation of just 1.275% (or 0.75% of the price increase) would necessitate nearly €2 billion (€1.959 billion), bringing the total estimated cost for benefit adjustments to over €5.3 billion.
Recent months have seen a rise in social security contributions due to increased employment and inflation-adjusted wages from renewed contracts, slightly easing the financial pressure on INPS, the national social security institute. Nevertheless, the government is considering tightening the revaluation criteria by altering the income brackets again.
In addition to the pension revaluation costs, the upcoming budget law must also find resources to block a scheduled three-month increase in the age and contribution requirements for retirement, which is set to take effect in 2027. Without intervention, which has been floated by some government officials, the requirements in 2027 would rise to 67 years and three months for the old-age pension. For early retirement, the requirement would become 43 years and one month of contributions for men and 42 years and one month for women, irrespective of age. A permanent block on this three-month increase is estimated to cost around €3 billion.
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