I am thinking of retiring and living in Italy, my parents place of
origin.  I have heard that Italy has a citizenship policy that states
even if you retain your U.S. citizenship, you still retain Italian
citizen status if your parents were born in Italy, even though I was
born in the U.S.  Can you tell me if this is true and provide details
on how I can obtain specific information on this subject.  Also, if
possible, information on how the above relates to the Italian national
pension plan they have in place.

I recently returned from Italy where I met someone born in the US who
also had Italian citizenship because his grandparents were born in
Italy and immigrated to the US.  I believe he said the policy was in
effect for two generations, so you should certainly qualify.

Contact the Italian embassy in Washington, D.C.
3000 Whitehaven Street, NW - Washington, DC 20008
Tel (202) 612-4400 - Fax (202) 518-2154

Here is a link that specfically addresses your question.
http://www.italylink.com/dual.html