Early retirement will soon be possible in Italy. An experiment is being put in place to test a new loan-based financing mode: the APE (Assegno Pensionistico).

Since 2011, the legal retirement age in Italy has risen to 66.7 years. The APE will allow to anticipate retirement up to 3 years and 7 months. It will offer freedom of choice and flexibility to seniors. This alternative is based on a memorandum of understanding between the former government of Matteo Renzi and the three main trade unions. Its experimental implementation is scheduled from May 2017 to December 2018.

How is this funded? There are two kinds of APE:

• On the one hand, the APE financed by the pensioner himself through a bank loan, called “voluntary APE”
• On the other hand, the so-called “social APE”, financed by the State

As for the first solution, it is a bank that has advanced the years of missing contributions and these will have to be repaid. Payment will start as soon as the legal retirement age is reached (but may start earlier). It will then be spread over 20 years in the form of a deduction from the pension. This could cost the retiree a lot! We are talking about the equivalent of one month’s salary per year that would be spent on repayment of this loan. In addition, in order to cover the risk of death, the subscriber must also take on a compulsory insurance.

The State may also finance this scheme and, in this case, no reimbursement will be requested. On the other hand, the conditions for access to this mode of financing are very limited. The beneficiaries will have to meet very strict criteria concerning their initial contribution period or their inability to continue their professional activity. However, the measure cannot be too costly to the public finance and should be limited to 600 to 700 million euro per year. L’Ipse is following this issue, among others with the Italian social partners.