INPS demystified – Italian Social Security (Previdenza Sociale) and how it works
Italian Social Security (Previdenza Sociale) is managed by the National Social Security Institute (Instituto Nazionale Previdenza Sociale, INPS) and provides benefits to employees and the self-employed in the event of illness, maternity or unemployment. It is also responsible for family allowances and provides benefits to the elderly and disabled. It is not in charge of the national health system, which is a separate entity and organised on a regional basis.
Who is eligible and who makes contributions
If you are legally working in Italy you are entitled to the same benefits provided by Italian social security institutions to Italian workers. Employers are responsible for registering their staff with INPS. Employer contributions are paid directly out of gross salary each month. Contribution rates and benefit entitlements vary by industry, with roughly two thirds of pension contributions paid by employers and one third paid by the employee. All those registered with INPS (both Italians and foreigners) can request a PIN number. With this number, and at any time, you can connect to a private section of the INPS site (WWW.INPS.IT) and verify your personal contribution status.
Retirement benefits paid out depend on the number of years you have made contributions combined with the amount of salary received.
The Self Employed
If you are a certain kind of self-employed worker (accountant, lawyer, engineer etc) you are not obliged to register and make contributions to INPS. Each self employed category has its own social security fund (“Cassa”) which regulates the financial obligations and benefits of its members.
The last few years have witnessed a significant growth in the number of self employed categories, which lack their own social security schemes (ie IT consultants or high tech specialists, known colloquially as atypical workers); in this instance you are obliged to register with INPS and, in particular, make contributions to one of its separately managed sections (“gestione separata”).
Contributions are based on income for the previous year, or for new businesses, on an estimated minimum income. Quarterly payments are made using Form F24, which is normally sent by INPS to your registered business address.
It is very important to remember that if you have made social security contributions during a period of at least 12 months in another EU country then these can count towards retirement benefits paid out in Italy.
INPS pays from 50% up to 66,66% of a worker’s average daily wage for absences from work due to sickness. This allowance is payable from the fourth day of illness for a maximum period of 180 days in a calendar year.
If you are a contract worker, you are paid based on contributions made over the previous 12 month period, and you are paid for the whole period during which you are ill and off work.
During this period, you must be available, at predetermined times of day, at the address communicated to INPS, in order that INPS authorised doctors can make home calls to check that you are genuinely ill.
If you are ill you must visit your doctor who will then transmit telematically to INPS, and to your employer, a certificate with a sick leave request specifying the diagnosis and the number of days needed for recovery.
If you are an Italian resident you are entitled to the sickness and maternity benefits provided by the national health service. Residents must register with an ASL (Azienda Sanitaria Locale), the local health authority, in your municipality of residence, in order to obtain a national health number and national health card (“tessera sanitaria”) which includes your tax code (“codice fiscale”). At the ASL, you can choose your GP from a list of authorised doctors (“medico di base”). Your “medico di base” is free of charge and then becomes your point of reference for all general health matters including prescriptions etc.
Applications for sickness benefits must be made directly to INPS or sent via registered post.
Maternity, Paternity and Parental Benefits
As an expectant mother, whether employed, on contract or self-employed, you are eligible for maternity leave, although self-employed and contract workers must also meet contribution and income criteria. Expectant mothers are entitled to paid leave for two months before the birth of the child and three months after the birth. The benefit represents 80% of the employed mother’s average daily salary (based on her salary in the last month before leave is taken). For self-employed mothers, the benefit is 80% of the average daily earnings over the 12 months prior before leave is taken.
As a father you are entitled to paternity leave in the event of the mother’s death or the mother’s abandonment of the child.
As adoptive parents of children you may also be entitled to maternity leave but you need to check with INPS for terms and conditions.
As a parent of a child, you are entitled to up to 11 months off work in the first eight years of their child’s life, at 30% of their salary. An income-based allowance may also be available if you are on a low income. Parents of twins are entitled to 22 months off work in the first eight years. If you are a self-employed mother you may take 3 months of leave in the year after your child’s birth at 30% of your daily salary.
If you wish to apply for maternity, paternity or parental benefits you should apply directly to INPS or write via registered post.
The Fornero Law of 2012 profoundly changed the requirements for receiving pension benefits. Under this current law, as a man, in order to retire, you need to be 66 years and seven months old (65 years and 7 months in the private sector and 66 years and one month i self employed) and to have made at least 20 years of contribution (old age pension) or, independently from age, 42 years and 10 months of contributions (41 years and 10 months for women) (early retirement).
Some exceptions to these rules are the following:
- From 1 May 2017, if you are a precocious worker, in other words you worked for at least 12 months before your nineteenth birthday, you may retire early with 41 years of contributions, independently of your age;
- As of 2017, if you are a working woman aged 57 with at least 35 years of contributions made before 31/12/2015 (so called option for women) then you are able to retire.
- As of 2017, if your work is recognised as arduous you are able to retire with diminished requirements, if you have reached the age of 61 and 7 months and made contributions for over 35 years.
If you are an employee, in order to receive a retirement pension, you must retire from all part time or full employment whereas you may continue to work on a self employed and/or professional basis.
If you want to apply for retirement benefits you should do so directly with INPS or with the Cassa for the professional body to which you belong. Most forms can be obtained from the INPS website (see above).
Disability and Survivor Benefits
You may be entitled to receive a disability pension if you are deemed unable to work by an INPS authorised doctor.
In order to be eligible, you must have paid social security contributions for at least five years, three of which must have been in the five year period before making an application. You should be aware that a disability pension is not permanent and that your disability status can be changed at any time.
If you wish to apply for a disability pension, you should contact directly your own professional Cassa or INPS and you can obtain most of the forms you need on the INPS website.
The following bodies (Casse) are responsible for the insurance of the disabled, as well as for retiree and survivor pensions. If you are self-employed you should register and make payments to the relevant Cassa or inquire about making payments directly to INPS.
- INPS – employed workers, certain categories of self-employed workers (farmers, farm workers, craftsmen and tradespeople), workers in new industries who do not yet have access to a particular Cassa.
- ENPALS –entertainment industry employees
- INPDAI – heads of enterprises
- INPGI – journalists
- A number of National Pension Funds for the Liberal Professions such as doctors, some pharmacists, veterinary surgeons, architects, surveyors, engineers, attorneys, accountants, tax advisors, employment consultants, notaries and customs agents.
If you are interested in finding out how INPS and the Italian pension system relate to your overall financial planning needs in Italy please feel free to contact us on the following link: https://www.britishinitaly.com/contact-us/