Retirement at 64 from 2026, but quotas are being dropped: what the reform will look like

With the arrival of the 2026 Budget Law , it's inevitable to talk about pensions . The government is preparing a package of changes for next year that could affect millions of workers.

The range includes a possible new fate for severance pay (TFR), a revised retirement age, and new options for those who want to retire early.

The underlying idea is to make the system more flexible , providing more options to those close to exiting, but without jeopardizing the public finances, which are affected. For this reason, however, the path to funding remains fraught with unclear issues.

TFR in supplementary funds for new hires

Let's start with the first proposal. Starting in 2026, contrary to what was initially proposed, the severance pay of new hires may no longer remain with the company but be automatically transferred to a pension fund .

Anyone who is hired will have six months to say whether they want to keep their severance pay as it is today, otherwise it will be transferred to supplementary pension provision .

It's called "reverse silent consent": you don't need to do anything to participate, but you have to be explicitly told if you don't want to participate. The government, in this way, wants to encourage more people to build a supplemental pension , alongside their public one. This is a way to get additional financial support when they retire, given that the state pension alone, at best (the worst case scenario is not seeing a pension at all), risks not being enough.

Quota 41 with early retirement: is it worth it?

Among the hypotheses under discussion there is also a new way, the so-calledQuota 41 ) to retire early: exit possible with 41 years of contributions and at least 62 years of age.

In exchange, however, the monthly allowance would undergo a proportional reduction , which depends on how much the retirement is brought forward with respect to the ordinary requirements.

It's not yet clear how the benefit reduction will be calculated: it remains to be determined whether it will be a fixed or variable percentage, and how much it will impact each year of advance payment. It's also unclear whether more lenient rules will be introduced for those with low family incomes, so as not to penalize the most vulnerable.

Goodbye to quotas, what's next?

But the direction emerging from the technical discussions is to gradually abandon the quota system , because it is too costly and complicated. For example, regarding Quota 103 , the government is considering not reintroducing it because it is underused, while the Option for Women should remain, even if the amounts are too low.

One of the measures that will almost certainly be confirmed is the so-called Giorgetti bonus . Those who already meet the requirements to leave their job but decide to stay in the workforce will receive in their paycheck the portion of contributions that would normally be paid to INPS (about 9% of their salary).

The government would like to create a simpler and more lasting mechanism that will allow for greater choice and less rigidity in retirement, without placing too much of a burden on the state budget. This isn't the definitive reform that will repeal the Fornero Law, of course, but rather an intermediate step that could be consolidated over the years.

Possible stop to automatic age increase

Another sensitive issue concerns the link between pensions and life expectancy. Currently, the law stipulates that, as we live longer, the retirement age will also rise. From 2027, without changes, it would therefore take longer to qualify for old-age or early retirement.

The government is considering raising the retirement age , so as not to force those who work to stay longer than expected. However, stopping this rush comes at a price : around 300 million euros each year .

To contain spending, small delays of one or two months are also being considered, which would help spread the costs without having a significant impact on the state budget.

Early retirement at 64 using severance pay

Economic solutions are also being considered to allow those who wish to retire early. To retire at 64, there are certain rules to follow. The main one is that you must have at least 25 years of contributions , and the pension amount must exceed a minimum threshold , calculated as a multiple of the social security benefit. Therefore, you can retire early only if your future pension guarantees a basic level of financial security.

To make this option less penalizing, the next budget bill includes benefits for women with children . Furthermore, consideration is being given to extending access to those who paid part of their contributions under the old pay-as-you-go system. In this case, however, the pension would be calculated entirely using the contributory method, which typically results in a lower pension.

To avoid a surge in applications all at once, it is being considered to introduce " windows ": those who meet the requirements would have to wait one or two months before actually being able to leave.

There's also another proposal: allowing the use of severance pay (TFR) set aside at INPS to supplement one's pension and reach the minimum required threshold. But the unions are unhappy with this proposal: they fear that the severance pay, originally intended as a deferred salary, to be collected at the end of the employment period, will be distorted and used to plug holes in the system.

Pension fund deductibility and new benefits

To convince more people, especially young people, to set aside resources in a pension fund, the government wants to make the option more tax-effective. Currently , just over €5,000 per year can be deducted from taxes : if this limit is raised, those who contribute more would have an immediate advantage on their tax returns. Currently, less than a third of people under 35 participate in a supplemental fund.

Is there money for these changes?

Reducing penalties under Quota 41 and halting the increase in the retirement age comes at a price. And, needless to say, this price is being paid by the public finances . Policymakers are now trying to figure out how to cover the costs of the new measures without overburdening our budgets. Among the options being considered is the creation of ad hoc funds to manage the transition.

At the end of 2024, pension spending reached €364 billion, up 2.5% compared to the previous year. Old-age and disability pensions increased the most, while early retirements decreased significantly : in the first six months of 2025, fewer than 98,000 were paid out, compared to over 118,000 in the same period of 2024. Looking ahead, spending will continue to weigh more heavily on GDP: estimates point to 15.7% in 2030 and 17.1% in 2040, when baby boomers will retire.

Meanwhile, the effective average retirement age continues to rise : in 2024 it reached 64.8 years . Compared to 1995, people are working an average of seven years more .