Covip (the Supervisory Authority) presented the Report for the year 8 on supplementary pensions on 2016 June. The sector – which is close to celebrating the first quarter of a century of organic regulation, while this year celebrates the tenth anniversary of the reform of the severance pay – presents a real profile and consistency: the resources accumulated at the end of the year in question amount to 151,3 .7,8 billion (+9% compared to the previous year) and constitute 3,6% of the GDP and XNUMX% of the financial assets of Italian families.
But these data, like those we will see later, if analyzed in their composition, highlight the frailty of the funded second pillar: 40% of these resources belong to pre-existing funds (compared to the 1993 reform), while the negotiated funds they settle for 30%, PIPs for 20%. The rest remains in open funds.
THE MEMBERSHIP
Even in terms of membership, the picture is less positive than it might seem at first glance. If it is true that the total number of members at the end of 2016 was equal to 7,8 million workers (5,8 million employees, 2 million self-employed), multiple members (a good 620 thousand) must be subtracted from this figure; therefore the effective number is reduced to about 7,2 million (27,8% of the workforce). Furthermore, almost 2 million members did not pay the expected contribution last year; therefore active members are reduced to 25,6% of those employed.
Since we are mainly dealing with self-employed workers and comparing this number of "dodgers" with all self-employed workers enrolled in the various complementary forms, we arrive at the conclusion that the self-employment sector continues to remain marginal and extraneous to this experience. This is truly singular, since they are operative and influential category organizations which have also attempted to give life to initiatives which, however, have never taken root or have done so to a very limited extent.
The other "significantly absent" is the public sector: but in this case there are regulatory limits (in the sense that the rules are not completely aligned with those of the private sectors) and above all the delays on the part of the collective bargaining which has, in a constitutive role.
The fact that action of a collective nature is lacking is also shown by the data on adhesions. As many as 2,9 million workers are enrolled in the so-called "new" PIPs (78 in number), i.e. individual pension plans recently introduced and revised by the law: therefore, it is a "do-it-yourself" supplementary pension, burdened even higher operating costs. Nonetheless, they continue to record a very high participation trend (+10,3% in 2016 and 42% of the total). 36 million adhere to the 2,6 negotiated funds; 1,3 million to the 43 open funds (those promoted by market players). There are only 650 members of the 294 pre-existing funds, despite the fact that they hold the largest share of resources destined for services and despite the small number of members (the fact is that they have been operating for decades now).
PENSION FORMS
It goes without saying, however, that the vast majority of contribution flows (14,2 billion last year) end up in the more recently established forms. Residual and "in search of an author" is the Fondinps, proof that everyone has to do their job even when it comes to social security institutions. The radiography of the sector highlights a structure that has been defined as "rachitic". At the end of 2016 there were 36 (32 in 2015) pension schemes with more than one billion in accumulated resources (13 negotiated funds, 4 open funds, 6 PIPs and 13 pre-existing funds); they concentrate 93,4 billion euros (80,5 in 2015) equal to 65 per cent of the total (60 per cent in 2015).
The class between 500 million and 1 billion includes 32 forms (11 traded funds, 10 open-ended funds, 2 PIPs and 9 pre-existing funds), totaling 23 billion euro of accumulated resources. There are 25 funds with resources of less than 197 million euros (203 in 2015), for an accumulated total of 1,5 billion (just 1 percent of the total resources allocated to services); no trading fund is included in this size class which, instead, includes 7 open funds, 34 PIPs and 156 pre-existing funds.
ACTIVE MEMBERS
The analysis can be similarly developed by taking the number of active subscribers as a reference. More than half (239 out of a total of 452) of the pension schemes have fewer than 1.000 members, for a total of 43.000; no traded fund belongs to this class which instead includes 4 open funds, 18 PIPs and 217 pre-existing funds. Out of 149 forms with less than 100 members, 147 are pre-existing funds and 2 PIPs; the total number of students enrolled in these forms is around 1.800. There are therefore still numerous schemes in the system with a very limited number of active members: in most cases these are pre-existing "run-down" funds, which often only welcome pensioners (at the end of 2016 there were 75 schemes with only pensioners).
GUARANTEED PERFORMANCE
Furthermore, the analysis of the guaranteed services and the investments made deserves particular interest – also to evaluate the correspondence of the supplementary pension to its institutional purposes. As far as the first question is concerned, if the supplementary pension scheme was meant to disburse a reserve pension in addition to the public one, this objective has essentially failed: only about 700 million have been translated into annuities; capital benefits amounted to 2 billion, surrenders to 1,6 billion, advances (largely not connected to specific causes such as healthcare and real estate expenses) amounted to 2 billion.
INVESTMENTS
In terms of investments we are witnessing, in practice, the transfer of private resources from the balance sheets of companies in the direction of the purchase of debt securities (61%), to a large extent (3/4) government securities, including foreign ones. In fact, the main source of funding for supplementary pensions is the severance indemnity. In 2016, the total flow of severance pay generated in the production system can be estimated at around 25,2 billion euro; of these, 13,7 billion remained set aside with companies, 5,7 billion paid into supplementary pension schemes and 5,8 billion earmarked for
Treasury Fund. Since the start of the reform, the distribution of the quotas of (except in 2008, the returns of the capitalized forms were higher than those, ope legis, of the TFR) generated in the production system between the various uses has remained almost constant: about 55 percent of the flows remain set aside in the company, a fifth of the severance indemnity is annually paid to the supplementary pension funds and the remainder is directed to the Treasury Fund.
Basically, from 2007 to 2016, out of the 243 billion severance indemnities generated overall in the production system, approximately 50 billion were allocated to supplementary pension schemes, 56 billion to the Treasury Fund (managed by INPS) and 136 billion remained set aside in company balance sheets. Basically, compared to 50 billion coming from corporate balance sheets in a decade, to observe the composition of investments, 3,4 billion (3%) were allocated to securities issued by the corporate system, of which 2,3 billion in bonds and 1,1 billion in shares.
Investment in "domestic" assets amounted to 35 billion (29,5%), 31 billion of which in government bonds. In conclusion, it cannot be said that "the second pillar" performs the functions for which it was designed. It does not help young people to improve their replacement rate (users are workers at the center of their professional career; women are less than 30%); it does not increase the capital market that much; it does not translate, if not rarely, into a second pension in addition to the compulsory one. Its main feature ends up being a form of subsidized savings in terms of financing (as it makes the severance indemnity available) and the tax regime, in favor of the older, stable and unionized cohorts. Moreover, even the territorial distribution sees the areas with the greatest development and employment in the Center-North prevail over those in the South.
A NEW MISSION
But the real turning point would be to identify a new mission. In this regard, a very interesting idea is contained in a recent article published online in the Sole-24ore by Stefano Patriarca, a long-time expert and now adviser to the Prime Minister's Office. Starting from the premise that the contributory generations have (by law) a retirement perspective no earlier than 68-70 years of age and that at this retirement age the replacement rates will ensure pensions almost equivalent to those guaranteed by the salary system (because it is not the type of calculation, it is believed, to produce modest benefits, but the precariousness and discontinuity of working life) Patriarca argues that the perspective of income integration, entrusted to the private pension, is destined to lose relevance.
“It is necessary – he writes – instead to think of a renewed system, which offers adequate income coverage even before retirement age, which allows, in this way, flexible choices of whether or not to stay on the job market. This is the need that the institution of RITA has begun to want to grasp, which allows you to have the amount accumulated in installments before public retirement. This is the path to be strengthened: not a modest annuity to be added to the public pension when it arrives, but an income opportunity before that age, overturning the pattern of binding rules that discourage joining funds precisely because the perception is often that of a "hibernating savings" as the public pension is perceived far away".
COVIP INVESTMENTS
Covip is entrusted with the task of supervising the investments of the privatized banks of freelancers. The report clearly highlights that pension funds and banks invest around 71 billion euros in Italy, equal to 37% of total assets. More than half of the resources (40,2 billion) is formed by government bonds, while just over a third by real estate investments (above all by the Banks for 18 billion euro). The portion earmarked for financing Italian companies is only 7,2 billion (3,7% of total assets: 3,4 billion in debt securities, 3,8 billion in equity securities (also including 800 million shares in Bank of Italy).
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