Ageing and funding systems: actual problems and misleading solutions
The reforms introduced in the Italian pension system during the 90’s have so
significantly reduced the amount of the perspective pensions as to spur serious
perplexities on the ability of many retired people to enjoy a decent standard of
living. In spite of this it is widely argued that the pension system in Italy will be
financially unsustainable in the long run. The suggested solutions usually involve
raising the age for retirement and the rentrenchement of the public pay-as-you-go
system with a corresponding extension privately funded pensions. The article argues
that the theoretical and empirical arguments in support of those two recommended
measures are weak and one-sided. Indeed, given some features of the
Italian economy, they might have negligible or even negative effects.