The lack of correspondence of the much-praised relationship between contributions made and social security services provided when one retires never fails to astonish. If a doctor examines the list of the corresponding amounts, cashed month after month during his/her entire working life, he/she notices that besides leaving a substantial share to the tax man for advance withholding tax, he/she also leaves a big slice to the Social Security Institute to ensure he/she is entitled to a valid pension on retirement.
The ideal thing would be to manage to accumulate a pension as close as possible to what one materially manages to collect at the end of the month during one’s working life.
To be truthful, if all one does is examine the percentage share of pension for each year of effective and redeemed contributions, one notices that the pension should in general be very close to one hundred percent of wages Many doctors have done different jobs during the course of their working lives and often their pension is split into two or more schemes depending on the Institute to which contributions have been paid: Enpam, Inps, Treasury (Inpdap), Enpas.
Of course, doctors consider that even though the separate schemes are proportionate to the single payments, the sum of the pensions owing will in any case be the correct joining up of the various schemes to form an amount corresponding to the series of activities performed during the lifetime. Unfortunately the bill is presented by the host and it is a big mistake to reckon without him. The State, which is so generous with insurance payment income, suddenly becomes very strict when it comes to pensions. On the pension accumulated during the course of a lifetime, the first taxes start to take toll.
The first to appear is that concerning the system of accumulation of pension schemes with other incomes. This is a series of cascade laws passed almost always at the same time as the financial laws of the various years and which with the one hand give and with the other take back from pension schemes as if these did not correspond to the payment of social security contributions made onto a personal account and which, like in the case of any other contract, guarantee a specific pension based on the contributions actually paid. Of course after the curtailment for the cumulative amount, one would think it would be possible to collect the pension to which one is entitled. Unfortunately, at this point, the second tax comes along – the Tax man.
This represents a second cut and a big one too.
Hopes are placed in the new tax-rates promised by Minister Tremonti, but for the time being, the tax burden of pension income is highly penalising. To give a concrete example of what happens to the original pension shown in the various social security regulations, I should like to take the case of a widow of a specialist hospital physician who, when alive, had also been a specialist with a practise of his own. To the original pension, a 30% curtailment is immediately made, because widows or widowers are only granted 70% of the full pension.
On the 70% of the Inpdap pension, the cumulative system of pensions to widows and widowers and the incomes of the beneficiary applies (art. 1 sub-section 41 of Law 8/8/1995, no. 335) For 2001, the law states that on the basis of the total incomes exceeding 28 million lire a year (gross), there is a percentage reduction of the pension tax-rate that fluctuates between 25, 40 and 50% depending on the amount of income.
If we suppose that the widow is given the maximum reduction in relation to the incomes of the first pension, 70% of the second pension is subject to an abatement of 50%, reducing it from 70 to 35%. On this 35% of pension to which the widow is entitled, taxes of course apply and she is lucky if she is left with 20% net from the pension scheme into which her husband paid contributions for 40 years or more during his lifetime. Inheritance tax is nothing by comparison! It is only to be hoped that Federspev, which has been struggling for years to protect the rights of doctors, chemists, vets and pensioned widows, will manage to convince the new government that in this field too, a way must be found to reform this heavy taxation of pensions.
(Translated by interpres sas)