Italy has one of the oldest populations in Europe and one of the lowest birth rates in the world. As a result, questions about how the country will sustain its pension system in the long term are becoming important.
One factor that often appears in economic report is the role played by foreign workers living in Italy.
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A younger workforce
One of the key characteristics of Italy’s foreign population is its age profile. Compared with the general population, foreign residents are on average younger and more likely to be employed.
This matters because Italy’s pension system is largely financed through a pay-as-you-go model, managed by INPS. In practice, the contributions paid by today’s workers are used to finance the pensions received by current retirees.
While the Italian population is ageing rapidly, the number of workers gradually shrinks. The contributions of people currently in employment play an important role in keeping the system running.
Contributions and public finances
Research by the Centro Studi e Ricerche IDOS estimates that foreign residents in Italy paid around €39.1 billion in taxes and social-security contributions in 2023.
Public spending related to migrants—including healthcare, education and welfare services—was estimated at about €34.5 billion, resulting in a positive fiscal balance of roughly €4.6 billion for the public budget.
On average, foreign residents contribute about €7,400 per year in taxes and social-security payments while receiving around €6,600 in public services.
Part of this difference is linked to demographics. In fact, younger populations tend to use fewer healthcare services and are less likely to receive pensions.
How pension contributions work
For anyone employed in Italy—including expats—pension contributions are paid automatically through the payroll system and managed by INPS.
Employees generally contribute around 9 percent of their gross salary, while employers add roughly 24 percent. These payments are recorded in an individual contribution history and form the basis for calculating future benefits.
Depending on the type of pension, workers typically need at least 10 years of contributions to qualify for certain benefits, although full retirement pensions require longer contribution periods.
For internationally mobile workers, EU rules and bilateral agreements can also allow pension contributions paid in different countries to be combined when calculating eligibility.
Different career paths
Another aspect often highlighted in studies is that not all foreign workers spend their entire careers in Italy. Some return to their home countries after a number of years, while others move to a third country.
When this happens, pension rights depend on international agreements and on the number of years worked in Italy. In some cases, workers may not accumulate enough contributions to qualify for a full Italian pension. Even though they have paid into the system during their time in the country.
A small but relevant piece of the puzzle
Foreign workers represent a relatively small share of the total population, but their participation in the labour market means they are part of the broader group of contributors supporting Italy’s welfare system.
For expats living and working in Italy, their monthly payroll deductions are therefore not just a personal pension. They are also one of the many elements that help sustain the country’s pay-as-you-go pension model.
