Italian Cabinet OKs Pension Reform Measure

November 21, 2005 ( - The Italian government has given its blessing to a long-awaited pension reform program, but then put the whole thing off by delaying implementation to 2008.

The reform aims to ease the strain onItaly’s public finances by encouraging workers to save money for their old age and to invest the severance pay they receive upon retirement in private pension funds, according to media reports.Passed in a Cabinet meeting after weeks of bickering, the reform plan still must be approved in Parliament.

Foreign Minister Gianfranco Fini told reporters that, if approved, the bill’s provisions would come into effect in 2008. The measure should channel around 14 billion euro ($16 billion) annually into pension funds from obligatory severance funds managed by employers.

At present around 7% of worker’s compensation inItaly is kept in corporate coffers until the person leaves the company .  The new legislation completes a reform approved in 2003 that will gradually increase Italians’ retirement age from 2008 onwards.

Italy’s employers’ association, Confindustria, welcomed the move. “We give an overall positive judgment” of the reform, Director General Maurizio Beretta said after a meeting at Confindustria’s headquarters.