Pension Funds's Perspective and Tfr: Opportunities and Options

58 Pages Posted: 2 Aug 2006

See all articles by Mariella Cozzolino

Mariella Cozzolino

ISAE, Istituto di Studi e Analisi Economica

Fernando Di Nicola

Department for tax policies - Italian Ministry of Finance

Michele Raitano

Sapienza University of Rome

Date Written: March 2006

Abstract

The use of TFR (a sort of severance payment) to fund the complementary pension scheme, except when the worker explicitly says not to, has been established by the legislative measures reforming the Italian pension system (law n. 243 approved in summer 2004 and decree n. 252 approved in December 2005). The Italian workers will have choice to invest more saving in pension funds or to maintain the TFR into their firms. In this paper the choices of workers are analyzed. The results of an ISAE survey, conducted in two phases - in September-December 2004 and in September-October 2005 - show that the measures included in the second pillar reform are not sufficient to influence the preferences of workers and to incentive them to invest the future flows of TFR in pension funds. The choice in favour of TFR - declared from more than that 80% of workers that have already decided which option choose - seems to depend crucially on the degree of uncertainty and risk related to the pension funds investments (versus the TFR in the firms option). The effects of four scenarios of the TFR's and the pension funds's taxation on income distribution, public budget and the worker's choices are analyzed.

Note: Downloadable document is in Italian.

Keywords: Pensionamento, Politiche previdenziali, Pensioni private, Tassazione

JEL Classification: J26, J32, H29

Suggested Citation

Cozzolino, Mariella and Di Nicola, Fernando and Raitano, Michele, Pension Funds's Perspective and Tfr: Opportunities and Options (March 2006). ISAE Working Paper No. 64, Available at SSRN: https://ssrn.com/abstract=921575 or http://dx.doi.org/10.2139/ssrn.921575

Mariella Cozzolino (Contact Author)

ISAE, Istituto di Studi e Analisi Economica ( email )

Piazza dell' Indipendenza 4
I-00185
Italy

Fernando Di Nicola

Department for tax policies - Italian Ministry of Finance ( email )

via dei Normanni, 5
Rome, 00185
Italy
+39 6 93836168 (Phone)

Michele Raitano

Sapienza University of Rome ( email )

Via del Castro Laurenziano 9
Roma, Rome 00161
Italy

HOME PAGE: http://https://sites.google.com/a/uniroma1.it/micheleraitano-eng/

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