In Italy there are two pension pillars, a public one managed by INPS (National Social Security Institute) and a private pillar.
Pension contributions towards INPS are approximately 23.5% for the employer and 9% for the employee and are mandatory.
The private system is called “Pensione Integrativa” is on a voluntary basis and can be divided in 3 categories:
- Fondi Pensione Chiusi (Closed Pension Funds)Fondi Pensione Aperti (Open Pension Funds)Piani Individuali Pensionistici or PIP (Individual Pension Plans)
Closed pension funds are so named precisely because membership is reserved for a limited range of workers. They are, in fact, foundations or associations established by collective agreements, which provide only for workers who are represented by that CBA.
Open pension funds are thus defined as opposed to closed pension funds, since anyone can join them regardless of their working situation and or CBA applied (employee, self-employed, freelance).
The PIPs are life insurance contracts and are established exclusively by insurance companies. Like open pension funds, membership is possible for any person regardless of their work activity.
Statutory pension contributions (INPS) are not taxed in Italy. In fact, they reduce the taxable income as in many other European countries.
Private pension contributions can be deductible only up to EUR 5164.57 er year.
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