HOW IT WORKS
Pension Fund Redemption
The question everyone asks before joining supplementary pension schemes is “But if I want to request the redemption of the pension fund before retiring, can I?”
The answer, in black and white, is “CERTAINLY”. Let’s not waste any more time and see immediately when it’s possible to request the redemption of the Pension Fund.
Pension fund redemption: the ABC
Let’s start with the basics. With Fondapi, if we decide to join, we pay our severance pay (TFR) plus a possible voluntary contribution that entitles us to the company’s contribution.
The core of the entire system is, however, the TFR.
If the TFR remains with the company, as we know, it is paid out by the company itself when the employment relationship ends.
If I pay it to Fondapi, the logic doesn’t change. When the employment relationship is terminated (dismissal, resignation, etc.), I can request the liquidation of all the TFR paid to the Fund, all possible voluntary contributions, and all possible company contributions.
This is the redemption before retirement. Let’s look at it in detail.
Pension fund redemption before retirement
- Dismissal
- Resignation
- End of fixed-term contract
- Appointment as manager
- Change in the National Collective Labor Agreement applied by the company
- 100%:
in this way, I completely terminate the relationship with Fondapi - 80%:
This allows you to keep the relationship with Fondapi active while redeeming almost all of the sums.
We recommend using this only in certain special cases (e.g., when the company has not completed all payments in favor of the member)
Fixed 23% IRPEF tax rate
So the minimum base rate. In the company, it starts from 23% and increases based on the TFR amount.
No. Fondapi applies a single Fund closure cost of €25.
You or your company must only communicate the reason why you lost the requirement to participate in Fondapi (see the reasons above)
Why is this type of redemption provided?
All this is possible because, remember, Fondapi is a negotiated pension fund, therefore, membership and permanence in the Fund are linked to the National Collective Labor Agreement that made them possible. If the National Collective Labor Agreement changes, or more simply, the employment relationship is interrupted and, therefore, ends, the member loses the participation requirement and has the possibility to request total redemption.
We remind you that this is a faculty of the member and not an obligation.
Redemption for retirement
Let’s now see what happens if we bring the Pension Fund to its natural expiration: retirement.
Obviously, you can request the liquidation of everything you have accumulated during your career. Also in this case, all contributions, personal and company, are liquidated, in addition to the TFR and any returns.
The fundamental difference, probably the biggest advantage that supplementary pension can offer its members, is the favorable taxation provided for this type of pension fund redemption. Significantly lower compared to the liquidation of TFR by the company.
Pension Fund redemption for retirement
It can be requested when the pension requirement is met.
- 100% of the accumulated capital in a lump sum
if the total position does not exceed the threshold of about €100,000.
The threshold varies based on age, gender, and the INPS social allowance for the year in which the request is made.
HERE IS THE TABLE WITH ALL THRESHOLDS. - At most 50% of the accumulated capital in a lump sum and the remaining 50% as an annuity
if the total position exceeds the threshold of about €100,000.
DISCOVER THE PENSION BENEFIT AS AN ANNUITY
With the super-facilitated taxation of maximum 15% which can decrease to 9% (substitute and definitive IRPEF rate)
Moreover, if the member has been enrolled for more than 15 years in supplementary pension schemes (so the calculation also considers any enrollments prior to Fondapi), for each year after the fifteenth, the tax authorities grant a discount on the applied rate equal to 0.3%.
E.g., if I have 20 years of enrollment in supplementary pension schemes and I retire, I have the right and advantage to an even more facilitated taxation equal to 13.5% (15% – (0.3% x 5 years))
If we extend this reasoning over a horizon of 35 years of enrollment, we reach the minimum taxation of 9%
Only the Fund closure cost of €25
- The company must communicate the termination of the employment relationship due to retirement;
- You must attach to the request the INPS certification (form TE 08) that certifies your pensioner status
Let's make an example of taxation for pension fund redemption for retirement
Worker with 35 years of work seniority and enrollment in supplementary pension schemes.
An accumulated TFR equal to €85,000
Taxation in the company: €85,000 x 24.36% (IRPEF) = €20,708 of tax.
Net TFR that, therefore, is actually paid to the pensioner is €64,292
Taxation with Pension Fund: €85,000 x 9% (IRPEF) = €7,650 of tax.
Net TFR that, therefore, is actually paid to the pensioner is €77,350
The worker who chose to contribute to Fondapi 35 years ago has saved as much as 13 THOUSAND EUROS in taxes (IRPEF)
On this document, it is also possible to consult the scheme of all types of redemption that can be requested from Fondapi.
Still Have Questions?
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