As pension reforms spark outrage across Europe, the Italian government has quietly raised the retirement age by more than three years as part of an austerity plan passed into law on Thursday by parliament.

“It’s Europe’s most sweeping pension reform, (approved) without a single day of demonstrations,” crowed Economy Minister Giulio Tremonti last week.

The unpopular austerity measures totalling 25 billion euros ($A36.46 billion) call for a three-year salary freeze for public workers, a 10 per cent cut in ministry budgets, less funding for local governments and more action to combat tax evasion, among other measures.

But in a shift largely ignored by the Italian opposition and by the media, the new law, building on broad outlines approved last year, will also raise retirement age gradually from 2015 in a complex system tied to life expectancy.


The national pensions institute INPS says its current estimates show that by 2050 people will be retiring more than three years later under the reform, and the state will have saved 86.9 billion euros ($A126.73 billion).

In France and Greece, plans to reform pensions to rein in budget deficits have sparked country-wide strikes and mass protests.

In Italy, while the austerity cuts sparked protests and strikes among a cross-section of Italian society including judges, diplomats, civil servants, public sector doctors and museum curators, the pension reform has passed under the radar, despite its size.

The government, the Italian press and even unions, some of which have been vocal on the budget cuts, have paid scant attention to pensions.

Some unions even approved the plan as a responsible move at a time when markets are so concerned over public finances.

“It’s a useful intervention that will further stabilise the pension system,” said Domenico Proietti of the moderate UIL union.

But others believe such a major reform should not have not been grouped together with the rest of the budget cuts.

“In the past, pension reforms have always been a sensitive issue,” said Maurizio Del Conte, labour law professor at Milan’s Bocconi University, recalling reforms that balanced pension accounts in 1995 and 2007.

The government used “the most effective way to change pensions: deferring the effects over time,” Del Conte added.

Italy’s complex pension system allows for two options to retire. Men in the private sector and both men and women civil servants can currently retire at age 65, while women in the private sector can retire at age 60.

By 2050, these ages will rise to 68 years and four months and 63 years and five months respectively, according to the INPS.

Alternatively anyone who has paid into the system for 35 years can currently retire at age 62, a figure that will rise to age 65 and four months, INPS says.