Pension Fund After 50 in Italy: Is It Still Worth It?

Myth 1: "After 50 it's too late"

Compound interest needs time, that's true: someone who starts at 30 has an advantage that cannot be made up at 55 (we cover it in supplementary pensions: why starting at 30 is worth twice as much). But after 50 the main reason to pay in is a different one, and it does not depend on the markets: the tax deduction.

From 2026, contributions to a pension fund are deductible from income up to €5,300 a year (Legislative Decree 252/2005, art. 8, paragraph 4, as amended by the 2026 Budget Law). Every euro you pay in gives you back income tax (IRPEF) straight away at your marginal rate: from 2026, 23% on income up to €28,000, 33% up to €50,000 and 43% above that (Consolidated Income Tax Act (TUIR), art. 11).

The deduction is not all gain, though: at retirement you pay a 15% tax on the deducted part, which falls to as little as 9% with years of membership. Someone joining today at 55 will have 12 years at 67, so they pay 15%. Here are the full figures, net of that tax.

How to read it: the saving is €5,300 times the rate times the years; the net figure subtracts the 15% tax on the deducted contributions (€5,300 times the years). No return is included: this is the advantage that remains even if the fund earned nothing. Members of many years' standing pay less than 15% on the way out, so their net figure is higher. The real saving is usually a little higher still, because of the regional and municipal income tax surcharges and, for employees between €28,000 and €50,000, the tax credits that rise as taxable income falls: our tax advantage simulator does the exact calculation on your income.

Two conditions: you need income on which you pay IRPEF, otherwise there is nothing to deduct; and a contribution counts for the year in which you make it, so by 31 December.

How much tax will you pay on the benefit?

The pension benefit is taxed at 15%, reduced by 0.30 points for each year of membership beyond the fifteenth, down to 9% after 35 years (Legislative Decree 252/2005, art. 11, paragraph 6). The tax applies to deducted contributions and to severance pay (TFR), not to returns, which the fund has already taxed year by year.

From 31 October 2026 there is also a new option, the instalment payout (erogazione frazionata) of the capital over at least five years. Be careful: it has its own, higher tax rate, which starts at 20% and falls by 0.25 points a year down to 15% (art. 11, paragraph 6-ter).

For comparison, severance pay left with the employer is taxed at the average rate of your last years of income, which usually starts at 23% (we cover it in severance pay (TFR) in the company or in a pension fund).

What counts is years of membership, not the years in which you paid in: years spent in another fund you transferred from also count, provided you did not redeem the whole account (art. 11, paragraph 9). If you joined before 2007, the earlier years count for at most fifteen, and the part built up until 2006 follows the tax rules of the time (art. 23, paragraph 5).

Myth 2: "If I change fund I lose my years and pay tax"

No. After two years of membership you can transfer your whole account to another fund, and the transfer is free of any tax charge (Legislative Decree 252/2005, art. 14, paragraphs 6 and 7). The years of membership built up in the old fund stay yours and keep reducing the final tax. The fund you leave has at most six months to complete the transfer (paragraph 8).

Myth 3: "If I leave my contractual fund I lose the employer's contribution"

That was true until 30 October 2026: the company's contribution went only to the fund set by the collective agreement. From 31 October 2026, if you transfer your account after at least two years, you are entitled to have your severance pay and the employer's contribution paid into the fund you chose: the 2026 Budget Law removed the reference to the limits set by collective agreements (art. 14, paragraph 6, in force from that date under art. 1, paragraph 202, of Law 199/2025, as amended in 2026).

This does not mean that moving always pays. Contractual funds remain the cheapest on average, and the rule has only just come into force: funds' and employers' procedures are still catching up. Before you sign, ask the receiving fund and your HR office in writing how the contribution will be paid. You can estimate what your agreement's contribution is worth with the contractual fund contributions simulator and compare the two routes with the contractual or open fund simulator.

How much do costs weigh over 10-15 years?

Less than over 35, but not a little. According to COVIP, the Italian pension fund regulator, the ten-year Synthetic Cost Indicator (ISC) averages 0.47% for contractual funds, 1.36% for open funds and 2.17% for individual pension plans (PIP).

An example with stated assumptions: €5,300 a year for 12 years and a gross return of 3% a year, from which we subtract the cost as if it were fixed every year. With a cost of 0.47% you reach about €75,100, with 2.17% about €67,100: a difference of about €8,000, almost as much as the net tax advantage at a 23% rate. Over 35 years COVIP estimates that a cost 1% a year lower leads to a benefit 18-20% higher. Past and hypothetical returns do not guarantee future ones.

Your fund's ISC is in its cost sheet (Scheda dei costi); COVIP's comparison tool sets them side by side.

Myth 4: "Close to retirement it's best to move everything to the guaranteed line"

The guaranteed line protects against swings, but it has a hidden cost: inflation. From 2015 to 2025 the guaranteed lines of contractual funds returned an average of 0.7% a year net of costs and tax, against inflation of 2.0% and severance pay revalued by 2.5% (COVIP, statistical data December 2025, table 4). Over ten years, at that pace, the purchasing power of the capital falls by about 12%.

And the money is not all needed on the day you retire. According to ISTAT mortality tables (2025 estimates), at 65 a man has on average another 20 years of life ahead and a woman 22.8. For someone who is 55 today, part of the capital has to last 30 years or more.

That is why the choice is usually not all or nothing but a gradual shift: many funds offer life-cycle paths that reduce equities with age, and from 2026 the law names them as the destination for automatic enrolment (Legislative Decree 252/2005, art. 8, paragraph 9). Changing risk line within the same fund is possible at the times its rules allow and, like a transfer, costs no tax. Our life-cycle simulator helps you split your goals by horizon: what you need within 5 years, between 5 and 15, and beyond 15.

If you join at 62 or 63, is there still time?

The pension benefit requires the conditions for the state pension and at least five years of membership of the fund (art. 11, paragraph 2). Someone who joins at 63 and retires at 67 does not have them yet.

The law does, however, let you keep paying in after pension age, if at the date of retirement you have at least one year of contributions to the fund, and choose for yourself when to claim the benefit (art. 8, paragraph 11). Meanwhile you keep deducting your contributions, because a pension is also income subject to IRPEF.

How much can you take as a lump sum?

At most 50% of the account; the rest becomes an annuity. If, however, the annuity from 70% of the account is less than half of the social allowance (assegno sociale), you can take it all (art. 11, paragraph 3). In 2026 the social allowance is €546.24 a month, €7,101.12 a year (INPS, circular 153/2025, annex 2). With the conversion coefficients of our redeemable capital simulator, the threshold at 67 is about €109,000: below it, you can take everything as a lump sum. The actual coefficients are set by each fund.

You may have read that from 2026 you could take 60% as a lump sum. The 2026 Budget Law provided for it, but Decree-Law 62/2026, converted by Law 112/2026, brought the limit back to 50% before the change came into force on 1 July.

The changes that remain concern the part not taken as a lump sum: besides the life annuity you can choose a fixed-term annuity, calculated on remaining life expectancy according to ISTAT, free withdrawals within that limit, or the instalment payout over at least five years, which is taxed more. If you joined by 28 April 1993 a fund already set up on 15 November 1992 (when Law 421/1992 came into force), you are an "old member" (vecchio iscritto) and have rules of your own, including the option to take everything as a lump sum (art. 23, paragraph 7). How to choose between lump sum, annuity and leaving the fund open is explained in finally retired: what to do with your pension fund.

Can you use the fund before retirement?

Yes, through the RITA, the temporary early supplementary annuity (rendita integrativa temporanea anticipata) (art. 11, paragraphs 4 and 4-bis). You can apply for it in two cases:

• you have stopped working, you are at most 5 years from the state old-age pension and you have at least 20 years of compulsory contributions;
• you have been out of work for more than 24 months and you are at most 10 years from the state old-age pension.

The fund pays you the part of the account you request in instalments until retirement, taxed at 15% down to 9% even on the part that would otherwise pay more (paragraph 4-ter). In 2025 funds paid out about €2.8 billion in RITA (COVIP). Our RITA tax advantage simulator compares the tax with and without it.

There are also advances for medical expenses, a home and other needs, with different rules and taxes: you will find them in is your pension fund locked? When you can withdraw.

What should you check before deciding?

1. Your marginal rate and your income in the years left: they determine what the deduction is worth.
2. How many years you have been a member, adding the funds you transferred from: they set the final tax.
3. Your fund's ISC against that of the fund you are considering.
4. If you are an employee, the employer's contribution under your collective agreement and how it will be paid after a transfer.
5. Your risk line, looking at the years in which you will use the money, not just at your retirement date.
6. If you are an old member, ask the fund what changes for you before transferring.

Glossary

• Deduction: an amount subtracted from income before IRPEF is calculated; it is worth the marginal rate applied to that amount.
• Marginal rate: the IRPEF rate of the highest bracket your income falls into; in 2026 it is 23%, 33% or 43%.
• Years of membership: the years enrolled in supplementary pension schemes, even without contributions, excluding those closed by a full redemption.
• ISC (Synthetic Cost Indicator): a fund's yearly cost as a percentage of the account, calculated by COVIP on standard assumptions so that funds can be compared.
• Risk line (comparto): the way the fund invests your money, from guaranteed to equity; a life-cycle path changes it automatically with age.
• RITA (temporary early supplementary annuity): the option to receive the fund account in instalments before retirement, with reduced tax.
• Social allowance (assegno sociale): the INPS benefit for people over 67 on low incomes; the law uses it as the yardstick for when you can take everything as a lump sum.
• Old member (vecchio iscritto): someone who, by 28 April 1993, had joined a pension fund already in existence at the end of 1992; they have their own rules on lump sums and tax.

Sources

• Legislative Decree 252 of 5 December 2005, text in force at 26/10/2026: art. 8 (paragraphs 4, 9, 11), art. 11 (paragraphs 2, 3, 3-bis, 4, 4-bis, 4-ter, 6, 6-ter, 9), art. 14 (paragraphs 6, 7, 8), art. 23 (paragraphs 5 and 7) (in Italian).
• Law 199 of 30 December 2025 (2026 Budget Law), art. 1, paragraphs 3 (IRPEF brackets), 201 and 202 (supplementary pensions and effective dates) (in Italian).
• Decree-Law 62 of 30 April 2026, converted by Law 112 of 25 June 2026, art. 16-ter (lump-sum limit brought back to 50%; instalment payout from 31 October 2026), as reflected in the text in force of Legislative Decree 252/2005 and by the Ministry of Labour (in Italian).
• Ministry of Labour, Le novità della Legge di Bilancio 2026, in vigore dal primo luglio, in materia di previdenza complementare (the 2026 Budget Law changes to supplementary pensions in force from 1 July), 18 June 2026 (in Italian).
• TUIR (Presidential Decree 917/1986), art. 11 (2026 IRPEF brackets) (in Italian).
• COVIP, press release of 10 June 2026 on the 2025 Annual Report (ISC, effect of costs over 35 years, RITA paid out) (in Italian).
• COVIP, supplementary pensions: main statistical data, December 2025, table 4 (net returns 2015-2025, TFR, inflation) (in Italian).
• COVIP, cost comparison tool (ISC) (in Italian).
• ISTAT, mortality tables, 2025 estimates (life expectancy at 65) (in Italian).
• INPS, circular 153 of 19 December 2025, annex 2 (2026 social allowance) (in Italian).