Second Pension in Italy: How Employees Can Deduct Up to €5,300 Annually

Second Pension in Italy: Tax Benefits and Mechanisms

The Italian supplementary pension system allows employees to build a second pension while enjoying significant tax advantages. By contributing to a pension fund such as Amundi Seconda Pensione, you can deduct up to €5,300 per year from your taxable income, reducing your immediate tax burden. The system also provides a favorable tax treatment on the final payout, which decreases the longer you stay in the fund. This article explains how the deduction works, how to manage contributions that exceed the limit, and how the progressive taxation of benefits applies.

The Tax Deduction Mechanism

Every year, contributions made to a supplementary pension fund (including both voluntary payments and employer contributions) are deductible from your total income up to a maximum of €5,300 (as per the 2026 Budget Law). The TFR (severance pay) transferred to the fund does not count toward this limit. The deduction means you lower the base on which your income tax (IRPEF) is calculated. For example, if you contribute €5,000 and your marginal tax rate is 43%, you save €2,150 in taxes. For employees, contributions made via payroll are automatically deducted; for voluntary extra payments, you must declare the amount in your tax return (model 730).

This immediate saving makes the second pension a powerful tool for long-term savings. The deduction applies up to the limit, but if you contribute more than €5,300 in a single year, the excess cannot be deducted in future years and must be tracked to avoid double taxation.

Managing Non-Deducted Contributions

If in any year your contributions exceed the €5,300 threshold, the surplus is considered non-deducted. This amount has already been taxed (since it came from your net income) and must not be taxed again when you receive your pension. To prevent double taxation, you must notify your pension fund (such as Amundi) of the amount of non-deducted contributions. This notification must be done by December 31 of the year following the contribution year. Most funds provide a specific form or an online function to report these amounts. It is crucial to document and communicate this annually.

Progressive Taxation on Payout

When you retire and start receiving benefits from the pension fund, the portion of the accumulated capital that comes from deducted contributions (including TFR) is subject to a reduced tax rate. The base rate is 15%. However, for each year of participation in the fund beyond the 15th year, the rate decreases by 0.30 percentage points. The maximum reduction is 6 points, meaning after 35 years the rate drops to 9%. The table below illustrates how the tax rate evolves over time.

The portion of capital derived from non-deducted contributions (which you have reported to the fund) is completely tax-free. Also, during the accumulation phase, the fund's investment returns are taxed at a reduced rate of 20% (or 12.5% for government bonds) instead of the standard 26%.

Summary: The Three Stages of Tax Advantage

The Italian supplementary pension system is designed to reward long-term saving. In the contribution phase, you reduce your current taxes. During accumulation, returns are lightly taxed. At retirement, the payout is taxed at a low rate that decreases with seniority, and non-deducted contributions are tax-free. This makes funds like Amundi Seconda Pensione an efficient way to build a second income stream for retirement.