In Italy there are more and more elderly people and fewer and fewer young people and in the next twenty years this imbalance is destined to increase. Today there are around 15 million people over 65, while people between 15 and 64 are just over 37 million. In 2050, according to demographic projections, the over 65s could represent around 35% of the population, while the working age group would drop to just above 55%. These numbers also closely concern pensions. In fact, the Italian system works above all on a pay-as-you-go basis: the contributions paid by workers are used to finance today’s pensions. If workers decrease and pensioners increase, keeping the system in balance becomes more difficult.
In this framework we also talk about minimum pensions, i.e. allowances intended for those who have accrued a limited pension and which can be integrated by the State to guarantee a minimum income. Their increase periodically returns to the center of the debate because it concerns people who often have insufficient incomes. However, increasing these allowances also means increasing the expenses to be incurred over the years. To understand how important this choice is, let’s start with today’s numbers.
How much does the pension system cost today
In 2026, INPS will provide over 21 million pensions, for a total expenditure of approximately 353.5 billion euros per year. An enormous figure, which in the coming decades will have to deal with population changes. According to projections from the State General Accounting Office, pension spending will continue to grow, especially because the largest generations will reach retirement age. At the same time, the working age population will be increasingly smaller.
However, if there are more pensioners to support and fewer people working, more resources are needed to maintain the same level of benefits. How heavy this bill will be will also depend on what happens to the labor market: more employees, higher wages and greater productivity can significantly change the balance of the coming years.
Salaries and employment: how it works today and what can change
Between 2025 and 2050, according to ISTAT projections, the population between 15 and 64 years could decrease by approximately 3.4 million people. This, however, does not automatically mean having 3.4 million fewer workers. In that age group there are also people who don’t work and, among those who work, the contributions paid can be very different. So the number alone is not enough: it matters how many people will have a job, how much they will earn and how much the economy will produce. And this is where an important part of the future of pensions is played out: fewer people of working age means a smaller base, but employment, wages and productivity can change the outcome quite a lot.
Demography, however, does not alone decide the future of pensions. What will make the difference will be employment, wages, productivity and length of working life: more people at work mean more contributions, higher wages increase income and greater productivity allows you to create more wealth even with fewer workers. It also matters how long you stay at work. If we live longer, moving the retirement age forward means paying contributions for more years and receiving the pension for a shorter period. It is one of the levers on which we can intervene to reduce the pressure on the system.
The picture, therefore, is not only written by demographics: the way we work and produce wealth can also change the final bill.
Minimum pensions: the problem is not just how much they increase
And here we are with minimum pensions. First, however, we need to understand what we are talking about.
What we commonly call “minimum pension” is not a different pension from the others: it is a pension of a very low amount which, if the beneficiary meets certain requirements, can be integrated up to the minimum payment required by law. The integration discipline was redefined in with law no. 638 of 1983, which introduced new rules linked above all to the income situation of the pensioner. In practice, therefore, it is not enough to have a low pension to automatically obtain the integration: income and other requirements established by law also count. Over time these rules have been modified, also with regard to the income to be considered.
And this is precisely where the debate on increases arises. The most recent proposals have suggested bringing the lowest allowances even towards 1000 euros per month, with the aim of increasing the income of pensioners who receive particularly low benefits. The problem comes when the increase becomes structural. A higher allowance in fact means a greater expense to be incurred every year, even in subsequent years. That expenditure must be inserted into a system which, as we have seen, will have to deal with an increasingly elderly population.
Then there is another important distinction: social security and assistance are not the same thing. The pension derives from contributions paid during working life; assistance instead serves to financially support those in certain conditions of need. For this reason, when we talk about increasing minimum pensions, it is not enough to ask how much the check will increase, but we should first of all understand how much that choice will cost over time and where the resources to finance it will come from.
What is the real risk for young people
So, who will pay the pensions of young people? When their time comes, the workers of the time will finance them. The problem is that those workers will be fewer than today, while the share of the elderly population will be higher. Minimum pensions are just one example of a larger question: how much space will Italy have, in the coming decades, to support social security spending without increasing the burden on younger generations?
The answer will depend on the country’s ability to create jobs, grow incomes and increase productivity, but also on the choices that are made on social security spending and on how to distribute resources between different generations. The real challenge of the next twenty years will therefore be able to support an increasingly elderly population with a smaller worker base because the pension bill does not only concern those who receive them today. It also concerns who, tomorrow, will have to finance them.
