Pension-Backed Loan of one-fifth is a loan that pensioners can obtain from a bank or a financial intermediary, repayable through a monthly direct debit charged by INPS on their pension. The charge may not exceed one fifth of the monthly pension amount.
Backed Loan of one-fifth can be claimed by holders of all pensions, with the exception of:
- Allowances and social welfare pensions;
- civilian invalidities;
- monthly allowances for assistance to pensioners due to incapacity;
- income support allowances (VOCRED, VOCOOP, VOESO, CRED27, COOP28);
- family unit allowances;
- pensions with joint ownership for the portion not pertaining to the person claiming the transfer;
- retirement benefits pursuant to Art. 4, paragraphs 1-7 ter, Law No. 92 of 28 June, 2012;
- Social APE.
To obtain a pension-Backed Loan of one-fifth a pensioner must first personally claim, at any INPS office, the notice of the pension transfer, a document which states the maximum amount of the loan instalment.
This document must therefore be delivered to the bank or finance company with which the loan agreement will be entered into. In the event that the pensioner applies to a company affiliated with the INPS, the transfer notice will be processed directly by the company through an electronic connection with the INPS and the interest rates applied to the loan agreement will be those established by the agreement.
The duration of the loan agreement contract cannot exceed ten years and insurance coverage is mandatory for the risk of premature death of benefit's beneficiary. Once all activities related to the signing of the contract with the financial institution have been completed and notification has been received, the INPS will pay the quota established by withholding it directly from the pension.
As pensioners can transfer up to one fifth of their pension, the instalment depends on the amount of the pension itself. The transferable amount is calculated net of tax and social security deductions, safeguarding the minimum amount established annually by the law for Compulsory General Insurance (AGO). For this reason, minimum retirement pensions cannot be transferred. In the case of holders of several transferable pensions of the same pension scheme, the calculation is made on the totalisation of pensions received.
Obligations of financial institutes
Banks and financial companies interested in granting pension-backed loan of one-fifth, in meeting the requisites required by law, must claim for accreditation at the INPS prior to entering into contracts pursuant to INPS circular No. 91 of 31 May 2007.
Securitisation companies that acquire loans related to financing with backed loan of one-fifth already under depreciation on pensions must also claim for accreditation.
Accredited banks and financial companies can also adhere to the agreement with the INPS (Article 8, ministerial decree Np. 313 of 27 December 2006), in view of the protection of pensioners, to contain the level of interest rates and to guarantee more favourable rates than those of the market.
Before establishing the amortisation schedule on the pension, based on the duration and the amount of the instalment agreed by the contract, the INPS checks the presence of some conditions to protect the pensioner:
- the bank or financial company must meet all the requisites required by law;
- the rate applied to the loan must not exceed the anti-usury threshold rate for accredited financial intermediaries or the conventional rate established, for one's own age bracket, for the loan disbursed by the affiliated financial intermediaries;
- the instalment envisaged by the contract must not exceed one fifth of the amount payable by the pension;
- all costs must be stated in the contract (preliminary investigation, early termination, insurance premium for premature death, commissions, interest).