Unconstitutional pension cuts, Government in trouble

The Government has two worries regarding social security: on the one hand, it wants to focus on the reform of supplementary pensions.

On the other hand, the sword of Damocles, which could translate into a loss of revenue of 10 billion in 3 years , concerns the cut in the automatic revaluation of the highest pensions based on inflation.

Appeal against the cut in pension revaluation

The issue was raised by the Court of Trento , which with an order dated June 30 referred to the Constitutional Court the assessment of the legitimacy of the equalization system introduced with the budget laws of 2023 and 2024.

The crux of the matter concerns the transition from a revaluation mechanism in brackets , which follows the Irpef model, to a "block" system, in which the reduced revaluation rate is applied to the entire amount of the pension , and not just to the individual brackets.

It all started with an appeal filed by a pensioner who contests the legitimacy of this new indexation method wanted by the Meloni Government and which is considered unfair and contrary to the principle of contributory proportionality.

“The ongoing trial cannot be concluded independently of the resolution of the aforementioned question of constitutional legitimacy,” the court order states. In practice, the first-instance judges cannot decide unless it is first established whether the Government’s rule is constitutional or unconstitutional. In particular, Article 1, paragraph 309 of Law 197/2022 and Article 1, paragraph 135 of Law 213/2023 are being called into question, which establish the use of the “block” system as a derogation.

Automatic equalization is a tool that aims to protect the purchasing power of pensioners in the presence of inflation. The ordinary bracket mechanism provides for a proportional adjustment of the different pension income brackets, but with the changes introduced by the Government, the revaluation has become less progressive and more penalizing for medium-high pensions , that is, those higher than four times the minimum, or approximately 1,650 euros net per month . The rationale was to hit the golden pensions, but in the meantime, middle-class pensions have also been targeted.

The unions' criticisms

The unions, in particular the Cgil, welcomed the referral to the Constitutional Court. In a joint statement they declared:

We welcome with great satisfaction the order of the Court of Trento which has referred to the Constitutional Court the assessment of the legitimacy of the automatic equalization mechanism introduced by the 2023 and 2024 budget laws. It is a decision that represents a fundamental step in our battle against an unfair and penalizing system, which has affected millions of pensioners in recent years".

The damage, the unions complain, is twofold: economic , because the loss consolidates over time, and moral , because the implicit pact between citizen and State is broken "according to which the contribution must correspond to a proportionate and dignified treatment".

What happens now?

The Court will now be called upon to establish whether the system adopted in the previous two years is compatible with the constitutional principles of proportionality, adequacy and reasonableness. In the event of a negative judgment, there would be two effects: the return to the pre-reform situation and the probable restitution of the portion deducted from social security benefits.