Italy: a reform should finally make supplementary pensions a reality in Italy

After years of missed takeoffs, supplementary pensions are finally set to take off in Italy. Indeed, starting January 1st 2007, employees of the Peninsula will have six months to decide what to do with their TFR - " trattamento fine di rapporto " - the part of their salary postponed and paid, with interests, when the person leaves the firm. Each person will have to decide if he/she wants to leave the TFR, as today, with the firm, or to transfer it to a pension fund. Important novelty: in case the employee doesn't choose, the TFR will automatically be transferred to a pension fund. (Ref. 061085)
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Last week’s agreement between the government and the social partners should put an end to an Italian peculiarity which has become totally archaic. The TFR was imagined back when people worked in the same company during their entire career. It enabled employees to redeem their savings when they retired. Today, the TFR, which represents non-negligible amounts of money (about a month of salary per year worked, or more exactly the annual wage divided by 13.5), became outdated: first because a perso

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