October 11, 2018 / 8:21 AM / 6 months ago

Italy's plan to lower retirement age will weigh on young - pension chief

ROME (Reuters) - The Italian government’s plans to lower the retirement age will cost future generations around 100 billion euros ($115.4 billion), the chief of Italy’s state pension agency, INPS, said on Thursday.

The reform “will increase pension debt for young people by about 100 billion euros,” Tito Boeri told a parliamentary hearing. “We have no choice but to sound an alarm.”

Italy’s populist coalition government, made up of the anti-establishment 5-Star Movement and right-wing League party, has promised to roll back a 2011 reform that raised the retirement age when Italy was at the centre of the eurozone debt crisis.

The government has earmarked 7 billion euros in the 2019 budget to allow people to retire at 62 if they have paid pension contributions for at least 38 years. Workers now need at least 42 years of contributions before retiring.

Italian Deputy Prime Minister Matteo Salvini has said watering down the so-called Fornero pension reform will allow 400,000 people to retire earlier than expected, opening a similar number of jobs for young people.

In a statement released after Boeri’s presentation, Salvini called on the head of INPS to stand down.

“As an Italian, I invite Dr. Boeri, who once more today is defending his beloved Fornero law, to resign from INPS and to stand at the next election with a campaign pledge to make people retire at 80,” Salvini said.

Boeri’s mandate at INPS expires in February and he looks highly unlikely to remain in his post following a number of clashes with the ruling parties.

Salvini said on Wednesday, after meeting a dozen of industry’s top managers, that state-controlled companies were ready to hire tens of thousands of people if the retirement age was lowered.

The Bank of Italy said on Tuesday that cutting the retirement age may put threaten the sustainability of the pension system. According to studies conducted by the central bank, there was no evidence that hiking pension age reduces youth employment, it added.

Boeri told lawmakers the new measures would increase pension spending by 1 percentage point of gross domestic product in 2021.

($1 = 0.8660 euros)

Reporting by Stefano Bernabei, writing by Giselda Vagnoni; editing by Steve Scherer, Larry King

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