Redemption of the degree, in 2024 it will cost up to 6 thousand euros a year: INPS indications are coming
Degree redemption, a method of counting years of university study as working years for pension purposes, has seen a notable increase. The “light” option, at a fixed price, will see an increase from around 5,776 euros to almost 6,100 euros per year. This increase is due to inflation, which influenced not only pensions but also the minimum taxable income, a fundamental parameter for calculating the cost of redemption. In the case of ordinary redemption, the cost varies based on the annual income of the interested party. With the increase in the minimum taxable income for artisans and traders, now set at over 18,000 euros, the ordinary redemption becomes less onerous only for those with an annual income lower than this threshold.
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Cost calculation for study periods prior to 1996, or until the end of 2011 with at least 18 years of contributions accrued before this date, is more complex. In these cases, the mathematical reserve method is used, which estimates the cost based on the pension benefit resulting from the redemption. A significant innovation this year concerns young people: INPS has introduced the possibility of transferring the contribution amount generated by the redemption of the degree free of charge, even for those without work. The measure could have important repercussions on future pension provision, especially for the Millennial generation, who face new rules on old-age pensions.
The ransom demand it can be made by anyone who has accrued at least one social security contribution, with the exception of the unemployed. The redemption amount varies based on the graduation period and the pension calculation system. For degrees obtained before January 1, 1996or until December 31, 2011 with 18 years of contributions pre-1996, the method of applies mathematical reserve. For post-1996 periods, the “percentage” method is used, calculating the IVS rate (33% in 2024, plus 1% beyond the first salary band) on the salary of the last 12 months before the application.
Since 2019, a subsidized redemption has been available for those who studied after 1995, with a lower fixed cost (5.7 thousand euros per year in 2023). This method can result in pension checks reduced by 20-30% due to the contribution calculation. The annual contribution limit for 2024 is 119,650 euros. The redemption amount can be paid in installments up to 120 installments, to be paid before retirement. Public employees can continue to pay in installments even after leaving work. Furthermore, the redemption can be deducted from taxes, reducing taxable income. The redemption request can be made online through the INPS portal, through patronages and intermediaries, or even by telephone. For a rough estimate, INPS provides an online simulator, while another application provides a detailed estimate of costs in the contributory or salary system.
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