WHAT IS TFR?

Fedaisf editorial staff

The Severance Indemnity is a social security institution, to guarantee workers, introduced by the
Law 297 of 1982
The text of the aforementioned Law replaced the old article 2120 of the Civil Code.
Severance indemnity is a form of deferred remuneration, paid upon termination of the employee's employment relationship.

LEGAL-NORMATIVE REFERENCES
Law 297/82 regulated in an innovative way the methods and calculation criteria for determining the indemnity due by the employer
Moreover, the Law exclusively provides for the obligation, for companies, of accounting registration of the portions of severance indemnities that accrue annually and of disbursing the sums at the end of the employment relationship.

The severance indemnity is determined by calculating, for each year of service, an amount equal to, and in any case not higher than, the gross salary due for each year, divided by the fixed parameter of 13.5. The share therefore represents 7.41% of the salary (precisely the 6.91% paid to the former employee plus the 0.50% paid to INPS)
This amount is revalued, on a compound basis, as at 31 December of each year, by a percentage consisting of the 1.5% in a fixed amount and the 75% of the increase in the Istat consumer price index.

The elements that contribute to the formation of the severance indemnity are numerous and range from the basic salary to function allowances, generally including all ongoing payments.
The TFR is an allowance reserved for employees in the private sector.

The severance indemnity is an indemnity that escapes ordinary taxation to be included in a separate taxation procedure, expressly elaborated for this type of indemnity and for equivalent indemnities.

Law 297/82 provides for the possibility for the worker to obtain advances (within the limit of 70% of the accrued, except for more favorable agreements). The advance can be obtained only once during the employment relationship provided that the employee has completed at least 8 years of service with the same employer.

The advance request must be justified by the need to:

TAXATION
Legislative Decree 47/2000 modified the taxation on severance indemnities for provisions made starting from 1 January 2001; currently, the situation is as follows:

How is the separate tax calculated?
1) The tax base:

tfrc = (tfr1-309,87 x n1) + (tfr2 – riv01)
tfrc = total tfr
severance pay1 = severance pay accrued as at 12/31/2000
tfr2 = tfr maturato all’1.1.2001
n1 = number of years of provision
rev01 = post 2001 financial performance

2) L’aliquota da applicare:

3) Reliquidation

THE INSURANCE SOLUTION
Even the TFR, like the TFM [Editor's note: end of mandate treatment], can be set aside in various forms or even not set aside except as a pure balance sheet item
An interesting solution is the one offered by taking out a policy as it is the only solution that allows you to have a minimum guaranteed return

What are the advantages of an insurance solution?

  1. the shares paid remain deductible from business income
  2. the premiums paid represent a fixed credit to be shown in the balance sheet, guaranteeing the necessary liquidity for sudden exits
    provides a guaranteed minimum return
  3. offloads the burden of management onto a third party
  4. employee loyalty to the company

For optimal management of issues relating to severance pay, the insurance solution should include a collective contract
The 99% of the TFR products existing on the market, are sold collectively.

SUBSCRIPTION TO THE SUPPLEMENTARY SECURITY

The worker will be able to express himself on the allocation of his severance pay to the supplementary pension scheme and on the instrument to be used (fund or FIP) within 6 months from the date of entry into force of the legislative decree implementing the delegation that is to say, for newly employed workers, within 6 months of hiring.

TFR AND SUPPLEMENTARY SECURITY

WARRANTY

PROTECTION OF PERFORMANCE
the services provided by the funds will have the guarantees of non-transferability, non-sequestration and non-attachability
BENEFITS FOR EMPLOYERS
the higher costs deriving from the development of the pension pillar will be offset by equivalent economic benefits (reduction in labor costs, easier access to credit)
NEW TAX INCENTIVES

THE ADVANTAGES OF THE EMPLOYEE WORKER

THE RULES AFTER THE severance indemnity reform

workers already enrolled in the supplementary pension scheme

workers not enrolled in the supplementary pension scheme

2005 TFR.it

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Ed.: From 1 January 2007 all employees in the private sector must, within six months of the date of hiring, explicitly demonstrate their willingness to confer or not the severance indemnity accruing to the complementary pension. During the aforementioned six-month period, the employee can decide whether to devolve his severance indemnity accruing to a supplementary pension scheme or whether to keep it in the company. The application of this mechanism requires the company to play an important role in providing preventive information to its employees. The employer will have to deliver the form (TFR1 models And TFR2) prepared by the Ministry of Labor and Social Security to be used for exercising the choice.

Near the expiry of the semester, the employer will have to provide workers who have not yet expressed any will regarding the conferral of their accruing severance indemnities, appropriate information in relation to the supplementary pension scheme towards which the employee's accruing severance indemnities will automatically be allocated .

See also:

Il Sole24ORE Plus

INPS. Severance pay

INPS. TFR-Miscellaneous Credits-Complementary Pension

Choice of severance pay: Inps or pension funds? [The sun24 HOURS]

From right to right, Renzi and the Reagan model

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