Italy may owe pensioners €5bn as court overturns reform

Italy's constitutional court has overturned a key plank of the debt-laden country's pension reforms in a ruling that could require the government to pay retirees back at least 5 billion euros ($5.6 billion).

In December 2011, when the country was under severe market pressure over its public debt, the technocrat government in power at the time had pushed through draconian austerity measures.

Among the reforms was a hike in the number of years of pension contributions, a change in the calculation of pensions to take into account salaries received through an entire working life rather than the most recent wages, as well as a halt in inflation-adjusted increases for pensions that are above 1,400 euros a month.

The then social affairs minister Elsa Fornero had burst into tears when announcing the changes at a press conference.

But in the ruling issued Thursday, the constitutional court overturned the government's decision to scrap inflation-adjusted pension increases, finding that it is a "constitutionally-founded" right which had been "sacrificed in an unreasonable manner".

The government's representative in court estimated that the savings made from this measure alone amounted to 5 billion euros for 2012 and 2013, before the subsequent government of Enrico Letta reintroduced a partial reinstatement of inflation adjustments in 2014.

In theory, about six million pensioners now have the right to reclaim payments amounting to an average of about 250 euros a year.

On Friday, the Italian media reported that any claims for repayment must be made before the court.