Funding a pension plan and deducting the contributions

Chiara, 34, works for an engineering company. In 2026 she pays €1,200 of her own money into her sector pension fund, her employer adds €900, and the severance pay she accrues, about €2,100, goes the same way. When she fills in her return she expects to deduct €4,200. The law allows €2,100: the severance pay she transfers is not a contribution, and in her tax band the gap is worth a few hundred euros.

Where the money in a pension fund comes from

Legislative Decree 252 of 2005, the statute on supplementary pensions, recognises three funding channels: contributions paid by the worker, contributions paid by the employer or principal, and the transfer of severance pay as it accrues. A self-employed person or a professional funds the position with their own payments only.

A position can exist without any earned income. For people with no employment or business income, and for people who are dependants for tax purposes, either they pay themselves or the person who supports them pays. That rule is what allows a parent to open and fund a pension plan for a son or daughter still at university.

For employees who join a collective fund, national and company agreements can set the minimum contribution owed by the employer and by the worker. It is expressed as a fixed sum or as a percentage of the pay used to compute severance pay. For the self-employed, a percentage applies to the income declared for IRPEF in the previous year.

The same agreements can set a minimum share of accruing severance pay that goes to the fund; where they say nothing, all of it goes. Someone who joins with severance pay alone, explicitly or tacitly, is not required to pay contributions of their own, and neither is the employer: the decree rules that out in so many words.

Adding part of one's salary is always possible, even without any agreement: the worker tells the employer the amount and the chosen fund. If an agreement entitles the worker to an employer contribution, that contribution follows the worker into the plan he or she has chosen, within the limits and on the terms the agreement lays down.

This course sets out the rules that apply in 2026, as read in the text published in the Official Gazette. The 2026 Budget Law rewrote several provisions with start dates spread across the year, so each rule below comes with the date from which it applies.

The deduction cap and what counts towards it

Contributions paid by the worker and by the employer or principal, whether voluntary or owed under an agreement, are deductible from total income. The ceiling stood for years at €5,164.57; from tax year 2026 the law raises it to €5,300. What that saves in euros depends on the IRPEF marginal rate of the person deducting.

The two sources that count are the worker's own payments and the employer's; for an employee both go through the payslip. Amounts the employer sets aside for company pension funds under Article 105 of the income tax code (TUIR) are added in. Transferred severance pay is not on the list: the decree treats it as a channel separate from contributions.

For an employee the deduction is almost always made already by the withholding agent, which takes payroll contributions out of the month's taxable pay. Checking the cap is still the employee's job: anyone who also pays into the fund by personal transfer must add that to the figure on the Certificazione unica to see whether the limit has been passed.

Anyone who pays the fund directly, not through the employer, claims the contributions on the income tax return, in the 730 form or in the Redditi Persone fisiche form, among deductible expenses. Keep the bank transfer receipts and the fund's annual statement, which breaks down payments by source.

The reasoning never changes: each euro deducted comes off the highest band reached and saves that band's rate, plus the regional and municipal surcharges. At a marginal rate of 33 per cent, €1,000 paid in and deducted really costs €670; at 23 per cent it costs €770.

The saving on the way in has to be read against the way out. What is deducted today is taxed when the benefit is paid, through the withholding of the second module, which starts at 15 per cent and falls with seniority. On a high marginal rate, the gap between the two is the whole tax case.

For a self-employed worker or a professional the whole route is personal. No withholding agent deducts anything through payroll: payments go to the fund or individual plan, they are claimed in the Redditi return, and the cap is policed by the taxpayer alone. Any percentage set by the fund is worked out on the previous year's income.

For the employer, contributions paid into employees' funds also benefit from the social security relief provided by Article 16 of the same decree. The course does not quantify it; what matters is that the employer's contribution counts twice, as a relieved cost for the business and as part of the worker's deductible cap.

Telling the fund about contributions not deducted

Some contributions may end up with no deduction: because they exceed the cap, because the taxpayer left them off the return, or because he or she chose not to claim them. For that portion the law requires a notice to the pension scheme stating the amount that was not deducted or will not be.

The deadline is 31 December of the year after the payment. If the right to a benefit arises earlier, for instance on retirement, the notice must be given by that date instead. A payment made in 2026 is therefore normally reported by 31 December 2027.

The reason is practical. The fund never sees its member's tax return. Without the notice it would treat the whole pot as if it had been deducted and would withhold tax on money that has already borne IRPEF. The second module shows how the already-taxed portion is taken out of the taxable base of the benefit.

The notice also concerns people below the cap who forgot to claim a payment on the return. What counts is what was actually deducted, not what could have been. The portion left without a deduction is then reported to the fund like any other excess.

Dependants and people in their first job

For contributions paid on behalf of a family member who is a tax dependant, the deduction belongs to the person who supports them, for the part the family member has not deducted personally. The overall ceiling does not multiply, though: the parent deducts payments for himself and for the child inside one annual cap.

If the child has a small income and deducts part of the payments personally, the parent is left only with the part the child has not deducted: the two deductions never overlap. Once the child stops being a dependant, later payments follow his or her own rules and personal cap.

A separate rule rewards people starting out. Workers whose first job began after the decree came into force, and who often pay little in their first five years of membership, get the unused room back: in the twenty years that follow the fifth, they may deduct contributions above the annual cap.

The catch-up has two limits. In total it cannot exceed the difference between what was deductible in the first five years and what was actually paid. And each year the extra cannot exceed half the cap: with the €5,300 ceiling, that is €2,650 more, for a maximum annual deduction of €7,950.

The mechanism calls for personal bookkeeping. The fund records payments, not the deductible room left, and the withholding agent keeps no track of it either. Note down, year by year, the cap in force and what was paid during the first five years, so that you always know how much is still recoverable.

The rule applies only to people who started working after the decree came into force. Anyone already working before cannot use it, even if they joined a fund only recently: for them the cap stays the annual one, with no back years to recover.

Automatic enrolment of new hires from 1 July 2026

The 2026 Budget Law rewrote the rules on how new hires join, with effect from 1 July 2026. Private-sector employees taking their first job, domestic workers excepted, are automatically enrolled in supplementary pension provision unless they expressly opt out within the deadline.

The destination is the collective fund named by national, local or company agreements. Where there is more than one, the fund chosen by the largest number of the company's workers prevails, unless a company agreement says otherwise. Without any agreement, the position goes to the residual scheme identified by Ministerial Decree 85 of 2020, together with all the severance pay.

Automatic enrolment sends all severance pay to the fund, plus employer and worker contributions as the agreements set them. The worker's contribution is not compulsory if annual gross pay is below the amount of the social allowance (assegno sociale). Severance pay can go in a reduced share, as the agreements allow, if the worker asks within the deadline.

Within sixty days of first being hired the worker can opt out. There are two routes: send all the severance pay to another scheme freely chosen, or keep it with the employer under Article 2120 of the Civil Code. The choice can later be reversed. The employer keeps the worker's signed statement and hands over a copy.

If no opt-out arrives, the employer notifies the fund and starts paying from the month after the sixty days expire. The first payment makes up everything owed since the hiring date, from which membership runs. On hiring, the employer must also brief the worker on the applicable agreements and on the choices available.

People who are not in their first job get the briefing too, and the employer obtains a written statement of the choice they made in the past. A worker who already has an open position has sixty days to say where the severance pay accruing from then on should go; with no answer, the automatic mechanism applies.

On the payslip the tax effect is immediate: contributions withheld from the first month count towards the €5,300 cap and reduce taxable pay. For the business, especially a small one, automatic enrolment becomes a calendar task: briefing on hiring, the sixty-day deadline, then the first payment with its arrears.

Switching funds and paying in after retirement

Two years after joining, a member may transfer the whole position to another pension scheme. Fund rules cannot restrict that right, even indirectly, and clauses charging entry or exit costs noticeably higher than the usual ones have no effect. The fund must complete the operation within six months of the request.

For tax purposes a transfer is neutral: moves between schemes governed by Decree 252 are free of any tax charge. The member who transfers also keeps the right to have accruing severance pay and any employer contribution paid to the new fund. Seniority is not lost, and the second module explains why that matters.

Contributions may also continue past the state pension age, provided that on retirement the member can show at least one year of payments into supplementary provision. In that case the member decides when to claim the benefit.