Cut pension costs says IMF (4)

(ANSA) - New York, March 19 - Italian pension spending remains high and there are "areas" where it could be cut, an International Monetary Fund working paper said Monday. Pension spending is still high despite reforms including the controversial Fornero law in 2011, which kept Italy on the international fiscal rails, said the paper by Michael Andrle, Shafik Hebous, Alvar Kangur and Mehdi Raissi entitled 'Italy: toward a growth-friendly fiscal reform'.
    The study said there were "many areas" where Italy could act to bring down pension spending and cut the budget deficit and public debt, the second-biggest in the eurozone after Greece's.
    Populist parties that won the recent Italian general election have vowed to scrap the Fornero reform in moves that would raise pension spending, experts say.
    One of the moves to cut spending, the paper said, would be to scrap the 14th monthly payment and reduce the 13th monthly payment in wage packets, which could be replaced by anti-poverty measures.
    Then, there could be new limits on the age of widowed spouses or orphans.
    "The enactment of measures that guarantee short-term savings and also ensure them in the medium term should be considered," the paper said, highlighting the difference between social-security contributions of payrolled workers, which are 33%, and the self-employed which are t 24%. The latter should be raised, it said "to at least 27%.
    High pension spending means there is less money available for sectors like education, the paper said.
    Te adoption of pro-growth and a mixture of more inclusive spending measures "will probably require a rationalisation" of social spending, especially on pensions, said the IMF working paper.