The legislative adjustments target the delayed and installment-based payment of the Trattamento di fine servizio (Tfs) for public administration workers. Unlike private sector employees who receive their liquidation immediately upon leaving employment, public workers have historically faced extended waiting periods and installment disbursements. This disparity prompted intervention from the Constitutional Court, setting a legal deadline of January 14, 2027, following an ordinance that declared deferred severance payments in conflict with Article 36 of the Constitution regarding fair compensation.
Understanding the Public Sector Severance Overhaul
- Faster Payouts: Starting in 2027, the initial Tfs installment for qualifying retirees drops to nine months, shortening further to six months in 2028, three months in 2029, and full immediate disbursement by 2030.
- Elimination of Installments: The budget plan progressively raises single-payment thresholds and completely phases out installment disbursements for public severance by 2035.
- Salary Tax Relief: The 15% substitute tax on auxiliary and continuous allowances remains active through 2027 for public sector workers earning up to 50,000 euros.
The Constitutional Pressure Driving Reform
The push to reform public sector severance stems directly from judicial scrutiny. With ordinance n. 25 deposited on March 5, 2026, the Constitutional Court reaffirmed that deferring and splitting the Trattamento di fine servizio violates constitutional principles protecting reasonable remuneration timelines, as noted by lamiafinanza.it. Rather than issuing an immediate ruling of illegitimity that would have made all severance sums instantly demandable—estimated by the INPS to cost up to 15.6 billion euros—the court scheduled its definitive judgment for January 14, 2027. The government’s budget maneuver establishes an exit strategy to spread these fiscal impacts across multiple state budgets.
According to technical reports accompanying the budget measure, removing the initial payout delay and subsequent annual quotas will cost approximately 0.86 billion euros across the 2028-2029 biennium. For workers reaching the standard old-age retirement threshold of 67 years and one month beginning January 1, 2027, the INPS circular n. 30 of 2026 confirms that the initial installment timeline compresses from twelve months down to nine months, bringing total administrative processing times down from roughly fifteen to twelve months.
Transition Timelines and Installment Thresholds
The current framework dictates that severance sums up to 50,000 euros gross are paid in a single installment, whereas amounts between 50,000 and 100,000 euros are divided into two payments, and sums exceeding 100,000 euros require three annual installments. The 2026 budget law incrementally alters these limits. The first installment ceiling rises to 60,000 euros in 2031, 70,000 euros in 2032, 80,000 euros in 2033, and 90,000 euros in 2034. By 2035, the entire installment system for public sector severance is scheduled to terminate permanently.
| Retirement Year | Initial Payout Wait Time | First Installment Limit |
|---|---|---|
| 2027 | 9 months | Up to €50,000 (single payment) |
| 2028 | 6 months | Standard tiered installments |
| 2029 | 3 months | Standard tiered installments |
| 2030 | Immediate | Up to €60,000 (following year balance) |
| 2035 | Immediate | Full lump-sum liquidation |
For voluntary resignations, the waiting period remains fixed at 24 months, whereas cases involving professional disability or employee death maintain a reduced processing window of 105 days. Alongside structural changes to severance, the budget maintains the 15% substitute tax on supplementary compensation for public workers under the 50,000-euro income cap. Following reports regarding salary adjustments for magistrates, the National Association of Magistrates (ANM), through president Giuseppe Tango, stated that it reserves a substantive evaluation of the measures once the statutory language is fully analyzed, emphasizing that judicial remuneration remains a baseline condition for safeguarding the independence of the jurisdiction.
Legislative Debates Proceed Toward Judicial Deadlines
The broader restructuring of public administration compensation continues to evolve as legislative debates proceed toward the judicial deadlines set by the Constitutional Court.
References
- Corte costituzionale – Ordinanza n. 25 (Depositata il 5 marzo 2026).
- INPS – Circolare n. 30 (2026).
- Legge di Bilancio – Relazione tecnica e disposizioni sul pubblico impiego.
