From traditional Pir to alternative Pir. With the Relaunch decree approved in May, individual savings plans split in two, but maintain their primary purpose, that of channeling investors' money towards the real economy and Italian SMEs. A goal that becomes even more important in a period in which small, medium and large companies are fighting for their very survival after the near-fatal injuries inflicted on their turnovers by the coronavirus pandemic that has blocked Italy for over two months.
"The alternative PIRs were built with the aim of channeling resources to unlisted small and medium-sized enterprises, whose access to capital is even more complex in a phase of strong pressure created by the health emergency", explains Fabio Galli, general manager of Assogestioni who conceived and vigorously promoted these new tools.
The functioning mechanism of the alternative PIRs is very similar to that of the traditional PIRs, as well as the tax advantages that the new instruments guarantee. However, there are fundamental differences that make the alternative plans different but complementary to the first ones: the investment thresholds and therefore the target investors to whom they are addressed change, the constraints of concentration of savings change and the range of products that can be included in the fund expands. Let's see, in detail, what's new.
ALTERNATIVE PIR AND TRADITIONAL PIR: THE SAME TAX ADVANTAGES
Let's start with a similarity that investors will like. The new alternative PIRs envisaged by thearticle 136 of the relaunch decree they have an operating mechanism identical to that of traditional PIRs: investors who subscribe to an individual savings plan and keep the investment for 5 years can count on total tax relief on profits, capital gains, dividends and are exempt from paying inheritance taxes.
The tax advantage that in 2017 had led to a real "race for PIRs" therefore remains unchanged and remains available to anyone who decides to take advantage of a traditional PIR or an alternative PIR.
ALTERNATIVE PIR AND TRADITIONAL PIR: THE COMPOSITION
The rule that establishes that 70 percent of the total value of the fund must be invested in instruments, including unlisted ones, issued or stipulated by companies resident in Italy or in European countries with permanent business in Italy has also been confirmed for alternative PIRs.
Precisely at this point, however, comes the first, fundamental difference. The latest legislation on traditional PIRs, approved at the end of 2019, establishes that of this 70%, at least 25% must be invested in financial instruments of companies other than those included in the Ftse Mib or equivalent indices. 5% of the 70% must instead be invested in instruments of companies other than those of the Ftse Mib and the Ftse Mid Cap.
What are the rules for Alternative Pir? According to the provisions of the relaunch decree, the entire percentage to be invested in Italian companies or companies with stable activities in Italy (therefore always 100% of the 70%) must be allocated to instruments of companies other than those listed on the Ftse Mib and the Ftse Mid Cap or on equivalent indices. The sum can also be invested in loans granted to these companies or in credits from them.
Simply put, with these rules, most of the investment goes to smaller companies that are currently most in difficulty due to the coronavirus emergency.
THE LIMIT OF CONCENTRATION: FROM 10 TO 20%
Another difference between traditional PIRs and alternative PIRs concerns the investment concentration limit envisaged for instruments issued by the same company or by the same group: for the former the threshold has been set at 10%, for the latter it rises to 20%.
ALTERNATIVE PIR AND TRADITIONAL PIR: THE PRODUCTS
Individual savings plans can be described as tax containers that contain various financial instruments, including shares, bonds, derivatives, collective investment undertakings, life insurance and capitalization contracts and so on. With the alternative PIRs, the range of products expands further. As Assogestioni explains, “considering the typically illiquid investment object, they lend themselves to being realized above all through the use of instruments for which the liquidity problems typical of open funds do not exist: Eltifs, closed-end private equity funds, private debt".
ALTERNATIVE PIR: YOU CAN INVEST MORE
The investment thresholds are also changing. Savers who decide to focus on traditional Pir can invest up to 30 euros a year for a total of 150 euros over 5 years. With alternative PIRs, on the other hand, the limit rises (and quite a lot): up to 150 thousand euros in a year and up to 1,5 million euros in total.
THEREFORE, THE CUSTOMER CHANGES
The greater risk that alternative PIRs involve and the higher investment thresholds allowed necessarily imply a different reference target. If the original instruments are aimed at a retail clientele, the alternatives focus on a higher range, called "affluent" or on a private investor, i.e. individuals with more substantial assets and a greater propensity for risk.
HOW TRADITIONAL PIRS DO IT
We conclude by making a brief reference to today, but also to yesterday. After the boom recorded in 2017 (10,9 billion in funding) and the good performance in 2018 (3,95 billion), 2019 can be considered as theannus horribilis of the PIRs, which closed the 12 months with a negative balance of one billion euro. At the base of debacle the continuous regulatory vicissitudes that have led the Governments that have followed one another to Palazzo Chigi to amend the regulations on individual savings plans several times. At the end of 2019 with the tax decree a return to the origins was determined which gave the insiders hope.
In 2020, however, the coronavirus emergency made the road to the ascent even more arduous. In the first quarter of the current year, the open-ended funds of the sector showed a balance of -234,2 million, while the assets promoted by the PIR compliant funds fell to 15,1 billion from 18,7 billion at the end of 2019. April came a breath of fresh air. According to the data provided by thePlus24 Observatory, last month there were inflows of 150 million euros and based on the latest forecasts by Intermonte, 2021 will be the year of recovery, with inflows returning positive to 1,2 billion, then rising to 2 billion in 2021 and 3 billion in 2022.
