Italy's Constitutional Court should have more carefully considered the costs before ruling against a 2011 freeze in inflation-linked increases in some higher State pensions, Economy Minister Pier Carlo Padoan said Friday. "The Constitutional Court did not consider the hole (in the budget) created regarding the pensions," Padoan said in an interview published in Italian daily newspaper La Repubblica.
This week, the government of Premier Matteo Renzi announced that 3.7 million pensioners will get single payments averaging 500 euros in August in response to the sentence. Refunds will be made on a sliding scale, depending on the size of the individual's pension.
Some with State pensions at higher income levels exceeding 3,200 euros a month gross will be excluded from the payouts.
Legal challenges are likely, but Renzi and Padoan have both argued that the national budget cannot afford to reimburse everyone affected by the 2011 pension measure.
That was designed to save the government cash as the country was racked by the global financial crisis and sovereign debt meltdown.
The current pension plan, contained in a decree unveiled on Monday, will cost the State around 2.18 billion euros.
That is well below some estimates that it would cost the national coffers up to 18 billion euros if it were to give a full rebate to all pensioners.
Padoan has warned that such payouts would cause significant damage to the national budget and would risk Italy's adherence with European Union budget rules.
In Friday's interview, Padoan argued that the courts should take the implications of their rulings into account.
"I have the utmost respect for the court's autonomy, but I hope that the interaction between the government and the Attorney General is more fruitful in the future when there are implications for the public finances," Padoan added. When asked about Padoan's comments, Renzi stressed that his government was not challenging the Constitutional Court's authority. "We are working with maximum respect and institutional harmony," Renzi said at the fringes of an EU summit in Riga.
"We have respected the Constitutional Court's decision and now it's a question of working together so that the signs of recovery can grow stronger".
The cost of the Italian pension system is becoming a sore point, given the aging population and the high unemployment rate among the country's young people.
Many fear the pension system will be bankrupt before they reach retirement age.
Such fears were fed by a report on Friday showing that almost 230,000 of Italy's 9.4 million old-age pensioners have been retired since before 1980 - 35 years ago.
National social security agency INPS added that the number of people taking early retirement fell by 43.7% from 149,129 in 2011 to 83,822 last year because of the controversial 2011 pension reforms.
Those included gradually increasing the retirement age as a cost-saving measure, although the down side of that plan was to make it harder for younger Italians to enter the work force.
For that reason, Renzi has vowed to unwind that reform, announcing his intention to make it easier for people to retire early - if they pay the price by accepting a pension cut.
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