Inps raises pension amounts to account for inflation: when and by how much

The Mechanism of Pension Increase in Italy

Every year, the National Social Security Institute (Inps), following the Ministry of Economy and Finance’s indications (which in turn considers data collected by Istat), adjusts the amount of pensions.
This adjustment is provided for by Law No.
448 of 1998, which introduced the mechanism called “equalization” through which both contributory and welfare benefits are adjusted to the cost of living.

Importance of Equalization Mechanism

This mechanism is crucial as it prevents the purchasing power of pensions from decreasing over time due to inflation.
When prices increase, the value of the pension diminishes.
Therefore, it is essential to ensure that the pension amount keeps pace with the rising cost of living.

However, both the original mechanism and any corrective measures implemented by subsequent governments have limited the adjustment for pensions exceeding four times the minimum benefit.
As a result, these pensions experience only a partial revaluation, leading to a devaluation over the years.

2025 Pension Increase Estimation

Looking ahead to 2025, after significant inflation rates in the past few years, the inflation rate has decreased to a modest 0.8% as of June, according to Istat.
The estimated inflation rate for the year, as outlined in the latest Economic and Financial Document approved, is 1.6%.

This projected rate ensures a new round of pension increases, albeit more moderate compared to previous years.
Specifically, the following categories are expected to benefit from the increase:

• Contributory benefits, direct and indirect, with a €1,000 pension increasing by €16, a €1,500 pension by €24
• Minimum pension, expected to rise to €608.18 (excluding potential further government adjustments)
• Social allowance, projected to increase from €534.41 to €542.96
• Disability pensions, set to rise from €333.33 to €338.66

Rivalry System for Pension Adjustment

There remains uncertainty regarding the adjustment mechanism to be applied.
Pensions not exceeding four times the minimum benefit are expected to be fully adjusted, while those surpassing this threshold face a tiered revaluation system.

Historically, pensions below €2,394.44 ( four times the minimum benefit) receive a full 100% increase, those between 4 and 5 times the minimum at 90%, and amounts exceeding 5 times at 75%.
However, recent years have seen a shift to a less favorable system with lower percentages and a comprehensive adjustment based on the reference rate.

The ultimate decision lies with the current government on whether to revert to the original rules or continue with the reduced revaluation.
The difference in outcomes can be significant, especially for pensions above €2,600, showcasing the potential impact of the chosen mechanism on pensioners’ income stability.