On closer inspection, this is not a bonus because the superiority of the check compensates for the inferiority of the duration while still guaranteeing the return of contributions.In Italy, the coefficients (broken down by age) are updated every two years. In the two-year period of validity, erga omnes are applied, ie regardless of the year of birth. For example, that of 65 years valid in the two-year period 2021 22 is applied this year to the cohort born in 1956 and next year to the one born in 1957. Furthermore, the coefficients of a two-year period are calculated (and “announced”) in the second year of the previous year based on the last available survival table. Those of 2021 22 were based in 2020 on the table found in 2018.
The protocol just described is unfair because it imputes different survival tables to members of the same cohort who retire in different biennials (at different ages). To better explain, let’s consider the workers who entered insurance before the Dini reform, in jargon called “mixed”, who retire at 67 years old while they can access the old age pension (from Fornero called “early”) About 57 (if they are women who have an uninterrupted contribution started after school age). Therefore, a cohort (for example the one born in 1964) retires, in dribs and drabs, over a period of 11 years (from 2021 to 2031) during which 6 different tables are attributed to it. This number will increase for workers who entered insurance after the Dini reform, in jargon called “pure”, who will be able to delay retirement up to 71 years (if until then without the accessory, economic and contributory requirements required by Fornero).
Since longevity is increasing, this system of “mutant tables” imputes higher survival rates to the members of a cohort who delay retirement than those previously attributed, at the same age, to members already in retirement. As if the delay could extend life. Therefore, the “late” members are punished with the erosion of the premium due to them due to the shorter duration of the pension. Those who delay out of necessity (not having acquired the right to a pension) cannot escape punishment, while those who would like to do so voluntarily escape with the renunciation. The postponement of retirement is discouraged not only by the specter of punishment but also by the uncertainty surrounding its measure. To the intra-generational inequities, just explained, are added the inter-generational ones explained elsewhere (Lavoce.info of 4 February 2020). The remedy for both is indicated by the Swedish model.
Cohort coefficients
Two premises are needed. The first is that, in Sweden, there is no retirement pension while it is allowed to retire within an age range which, after various vicissitudes, currently ranges from 65 to 68 years. The choice within the bracket is completely free, that is, it does not take into account any non-personal requisites, for example concerning the seniority accrued in contributions or the amount of the pension due. The second premise is that (in Sweden as elsewhere) the length of retirement depends not only on the age of access but also on a multitude of other attributes including cohort, gender, socio-economic status, education, l geographical area, marital status, age gap between spouses, work activities carried out, etc. The correspondence can therefore be perfected at will by increasing the number of attributes on the basis of which to differentiate the transformation coefficients. However, it is necessary to evaluate both the opacity generated by a jungle of coefficients, and the difficulty in gathering the amount of capillary information necessary to calculate them all. Not to mention that the omission of certain attributes, such as gender, may be socially desired.
These considerations led Sweden to differentiate the coefficients (broken down by age) only on the basis of the year of birth. The importance of the latter is evidenced by the fact that each cohort between that born in 1870 and that born in 1920 (last extinct and therefore “observable”) has on average gained, at 65 years of age, 30 days of residual life compared to the previous cohort. In reality, the earnings have grown at increasing steps according to a trend that the projections of the American Social Security confirm for the following cohorts (not yet extinct). In practice, the Swedish protocol provides that each cohort is definitively assigned coefficients his own in the calendar year in which he turns 64, that is, on the eve of entering the retirement age bracket. Thus in 2020 the coefficients were assigned to those born in 1956, in 2019 to those born in 1955, and so on. It follows that the four coefficients in force in 2021 come from different years. Cohort coefficients avoid punishing those who delay retirement, and therefore discourage those who intend to do so on a voluntary basis. However, it’s not all plain sailing.