Can INPS go bankrupt? the question becomes more concrete as the years and the effects of the demographic curve of Western countries pass, and Italy is no exception, it continues to impose its inexorable effects.
Already today, INPS is unable with its own resources (the contributions paid over the years by workers) to cover the cost of the pensions it pays: for 2024, INPS forecasts a budget deficit of 9.2 billion euros, an increase significant compared to the forecasts for 2023.
In fact, paying pensions will cost the state almost 10 billion euros, resources that must be acquired from general taxation or by resorting to debt through the issuance of BTPs.
It could be said, therefore, that in fact INPS has already failed in its task of collecting and valorising the contributions paid to guarantee a pension commensurate with the actual payments of each taxpayer and is therefore already, in fact, a branch of the state that distributes to various types of income to the inactive population, consuming state resources.
Without these, the INPS budget would already be unsustainable and the institute would have already gone bankrupt (or in any case would have had to significantly reduce pensions).
How many pensions does INPS pay and how much do they cost? As of 1 January 2023, INPS managed 17.7 million pensions, with 77.2% of a social security nature and 22.8% of a welfare type.
In 2024, INPS has forecast spending on social security pensions of approximately 310.8 billion euros, marking an increase of 5.19% compared to the previous year, mainly due to the revaluations of existing pensions.
How demography in Italy will change in the coming years The Italian demographic structure is facing notable changes.
According to Istat forecasts, the resident population in Italy is decreasing: from 1 January 2022, when it had 59 million inhabitants, a decrease is expected to 58.1 million in 2030, and further to 54.4 million in 2050 This decreasing trend is expected until 2080, when the population is expected to decline to 45.8 million.
In 2050, it is estimated that the share of individuals aged 65 and over will be 34.5% of the total population, compared to 23.8% recorded in 2022.
The ratio between individuals of working age (15-64 years) and those not of working age (0-14 and 65 years and over) will go from around three to two in 2022 to around one to one in 2050.
This implies a marked aging of the population, with a consequent impact on social protection policies and, therefore , the INPS budgets and the pensions that the pension system will actually be able to afford to pay.
The composition of families is also evolving: by 2042, only one in four families will be made up of a couple with children, while more than one in five will have none.
Additionally, the number of people living alone is expected to increase from 8.4 million in 2022 to 9.8 million in 2042, with significant growth among older adults living alone.
This aspect will also be crucial with respect to the pension system given that all these elderly and lonely people will not be able to count on the support, including economic, of their children.
Let's take into account that, in this sense, even practical help (going shopping, taking you to the doctor) are supports typically given by children which, for single people, require an economic outlay.
So, can INPS fail? Given what we have explained so far, INPS cannot fail except by political decision.
On the other hand, it is clear that the institution's budgets (and the separate social security funds, for the most part, are no exception) will only worsen in the years to come, requiring increasing outlays to the state budget.
The limit, in this sense, will be given by the contingencies of politics: every government finds itself (and will find itself) faced with the choice: continue to pay and revalue pensions with a burden on public budgets or initiate reforms that cut them? Let us consider that, again due to the ongoing demographic dynamics combined with the poor aptitude of young people in going to the polls, current (or soon-to-be) pensioners are in fact the majority of the electoral base of all the parties that can go to government (and, perhaps , everyone's).
On these assumptions, governments tend to propose hypocritical reforms that have little effect on current pensions (as we have seen this year, costs will rise nominally due to the adjustment of benefits to inflation) but great effects on future pensions, with today's workers , especially young people, who pay the historic maximum in social security rates and will almost certainly have very low or no pensions, certainly not in line with the contributions paid if we compare this ratio for pensioners today and in previous years.
It must be said, on the other hand, that pensions are a distribution of income that is normally spent in the current year and therefore generates GDP: the effect of a cut in benefits would therefore be profoundly recessive, net of the social effects of decisions of this type.
The problem is therefore complex and does not appear to have a simple and linear solution.
Greece's Ambitious Economic Revival Plan At the beginning of this year, Greece embarked on an… Read More
September 2024 NoiPa Pay Stub: Teacher Salary Updates The NoiPa pay stub for September 2024,… Read More
Japan's Growing Military Budget: A New Global Player? Japan is poised to become the third… Read More