The road is narrow on the pension chapter of the 2027 budget. The public finance policy document seems to leave little room for action, considering that spending on pensions is expected to increase by 4.2% as a result of the indexation of pensions to the changes observed in the previous year in the consumer price index for families of workers and employees (FOI), net of tobacco. An increase of almost 15 billion (14.7 billion to be exact) is expected in the 2027 accounts, going from 351.8 billion in 2026 to 366.5 billion in 2027.
In November, the percentage of provisional revaluation of pensions for 2027 will be foreseen in the decree of the Ministry of Economy and Finance, in agreement with the Ministry of Labor; the current mechanism based on the amount bands for 2026 fully recognizes the change in the Foi index up to four times the INPS minimum payment; to the extent of 90% for the portion between four and five times the minimum; and 75% for the portion exceeding five times the minimum. As a result of the application of the current bracket mechanism, the largely prevalent part of pensions is subject to a complete revaluation. The revaluation applied from 1 January 2027 will therefore be determined on the basis of the information available in November on the actual and presumable trend up to the end of the year of the Foi index net of tobacco; then any deviations compared to the variation subsequently ascertained in the final balance by Istat will be paid with the adjustment at the time of the revaluation of the following year.
The ratio between pension expenditure and GDP, based on the Dpfp tables, is destined to rise from 15.1% in 2026 to 15.3% in 2027. The pensions item represents the "bulk" of social benefits, the growth of which "will be maximum in 2027 (3.6%) also due to the indexation of pensions" to the variations observed in the previous year by the FOI index (net of tobacco). Spending on social benefits, again according to the DPFP, is expected to rise from 471 billion to 488.1 billion. The weight of social benefits overall is expected to rise from 20.3% in 2026 to 20.4% in 2027.
In light of these forecasts, government technicians are also reflecting on whether or not to confirm the current revaluation mechanism by bands. The tiered mechanism has returned since 2025, so anyone who exceeds a threshold does not lose the full revaluation on the lower part of the pension. Among the hypotheses being studied by government technicians and the State General Accounting Office there would be a return to the mechanism of the 2023 Budget law: unlike the band mechanism according to which the reduction in indexation applied only to the part exceeding each threshold, it was decided for the two-year period 2023-2024 a block indexation method applied to the entire pension allowance, which is more unfavorable to pensioners, which produced a lower pension expense of 2.1 billion (2023) and almost 4.1 billion in 2024 net of tax effects. The reflection is open.
Also on the pension chapter in the 2027 budget, an endowment intended for the end-of-service indemnity of PA employees will also be counted. The Constitutional Court reiterated that the system that forces public employees to wait even 12 or 24 months (receiving the TFS in installments) is in conflict with article 36 of the Constitution, as it is a form of deferred remuneration to be paid within a reasonable time. The discussion is expected in mid-January 2027, which is why the government technicians who are examining the dossier are thinking about an intervention in the 2027 Budget in the order of 600 million euros for a gradual overcoming of the system that was the subject of the Consulta's findings.
