October 11, 2018 / 9:19 AM / 10 months ago

Italy's plan to lower retirement age to weigh on young: pension chief

ROME (Reuters) - The Italian government’s plan to lower the retirement age will cost future generations around 100 billion euros ($115.4 billion), the chief of the state pension agency INPS said on Thursday.

The reform “will increase pension debt for young people by about 100 billion euros,” Tito Boeri said in a parliamentary hearing.

“We have no choice but to sound an alarm,” he added.

The populist coalition, made up of anti-establishment 5-Star Movement and right-wing League party, has promised to roll back a 2011 reform that hiked the retirement age in a moment when Italy was at the center of the eurozone debt crisis.

The executive has earmarked 7 billion euros ($8.1 billion) in 2019 budget to allow people to retire at 62 if they have paid pension contributions for at least 38 years.

Italy’s Deputy Prime Minister Matteo Salvini has said the measure will allow 400,000 people to retire earlier than expected, freeing up a similar number of jobs for young people.

After meeting a dozen of industry’s top managers on Wednesday night, Salvini said that state-controlled companies are ready to hire tens of thousands of people if the retirement age is lowered.

The Bank of Italy warned on Tuesday that lowering the retirement age may put at risk the sustainability of the pension system. According to studies conducted by the central bank, there is no evidence that hiking pension age reduces youth employment.

Boeri told lawmakers that the new measures would increase pension spending by 1 percentage point of the gross domestic product (GDP) already in 2021.

Reporting by Stefano Bernabei, writing by Giselda Vagnoni, editing by Steve Scherer

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