Abstract

Recent pension reforms rely on the diversion of the "Trattamento di fine rapporto" (TFR) to pension funds so as to finance future private pension provision. This paper estimates the expected TFR based on Italian employees' working life careers. Using administrative data we disentangle the expected amount accumulated until retirement for a worker with continuous career and no liquidity needs as well as the amount that will not accrue because of the discontinuity of job careers and/or liquidity constraints. We find that the average expected TFR at retirement is substantial. However, the leakage during working life is dominant for several working groups. Our results support the skeptical view about the universal role of TFR as retirement provision.