INPS: Contribution Cap – Clarifications Regarding the Employment of a Retired Worker

In Message No. 3748, dated November 11, 2024, INPS provided clarifications on the re-employment of workers or the continuation of an employment relationship after the individual has begun receiving pension benefits.

What Is the Contribution Cap?

The contribution cap is a mechanism introduced by the pension reform enacted under Law No. 335 of August 8, 1995, specifically Article 2, paragraph 18. It establishes a limit on the gross taxable income of employees that is subject to pension contributions. This threshold is set annually and currently stands at €119,650. The cap applies to workers who did not have any credited social security contributions for any reason before January 1, 1996.

The contribution cap has two primary effects:

1. Limit on Contribution Calculations: Once the annual cap is reached, neither the employer nor the employee is required to pay pension-related “IVS” contributions on income exceeding the threshold.
2. Limit on Pension Calculations: Pension benefits are calculated only on income up to the cap. This means that any annual income exceeding the threshold is not considered in determining the pension amount.

In summary, for workers subject to the contribution cap, pension contributions are calculated only up to the specified limit. Consequently, income above this threshold does not impact the future pension amount.

Status of “Old Enrolled” vs. “New Enrolled”

INPS clarified in its message that the date of initial enrollment in mandatory pension schemes is a key factor in verifying the proper fulfillment of contribution obligations by employers.

The contribution cap applies only to workers without any social security contributions credited before January 1, 1996, or to those who opted for the contributory pension system. It does not apply to individuals with contributions accrued before this date.

Contribution Cap for 2024

The contribution cap is updated annually based on ISTAT’s consumer price index. For 2024, the cap for workers subject to the contributory system has been set at €119,650.

Re-employment of Retired Workers

Regarding the re-employment of individuals after retirement, INPS reiterated the position of the Ministry of Labor and Social Policies: re-employment following the receipt of a pension does not nullify the worker’s original status as an “old enrolled”. Therefore, the date of initial enrollment in mandatory pension schemes remains valid for applying the rules established by Article 2, paragraph 18, of Law No. 335 of 1995, regardless of whether the individual has begun receiving pension benefits.

Special Considerations for Self-Employed Re-employed Workers

The Ministry further clarified that if a retired individual begins a freelance activity requiring enrollment in a professional body regulated by Legislative Decrees No. 509 of 1994 or No. 103 of 1996, the activity will be governed by the specific rules established by the relevant professional body.