There are 32 funds, plus two million and 670 thousand workers 47 billion euros in resources accumulated for future services, net funding is growing and returns in the medium-long term are clearly higher than the revaluation of the severance pay: this is the positive picture that emerges from the "Report on occupational pension funds 2017" presented today in Rome on the occasion of the annual meeting of Assofondipensione, to which among others, the president of Confindustria Vincenzo Boccia, the minister of Labor and Social Policies Giuliano Poletti, the undersecretary of the ministry of Economy and Finance Pierpaolo Baretta, the head of the Social Security Policy Service of Uil Fabio Porcelli and the president of Covip took part Mario Padula. The works began with the report of the president of Assofondipensione Giovanni Maggi and closed with the conclusions of the vice president Roberto Ghiselli.
Relaunch memberships
Pension funds is the association established in 2003 by the main business and worker organizations (Confindustria, Confcommercio, Confservizi, Confcooperative, Legacoop, Agci, and Cgil, Cisl, Uil and Ugl) of which the pension funds established on a national or regional basis are members in the main productive sectors of the country.
In the last three years, also thanks to the generalized contractual adhesion introduced by contract in some sectors, the members of the funds have increased by 12%. “Despite the development of pension funds represents a successful experience – argued the president of Assofondipensione John Maggi - however, it cannot be overlooked that today less than a third of potentially participating workers are registered, despite a public pension system that is no longer able to guarantee adequate pension treatments".
For this reason, Assofondipensione has today placed among the central themes of the Shareholders' Meeting that of the growth in size of the funds, an objective to be pursued with initiatives that favor the increase in members and consequently in managed assets: starting from pension education and communication, to relaunch memberships and increase awareness of the importance of joining the supplementary pension, also acting as a stimulus for the Government and the competent Ministries for a recovery of information at an institutional level.
Investing in the real economy
The other important issue that President Maggi addressed in his report is that of investments in the real economy. “Trading funds - claimed - they are now mature institutional investors, capable of being doubly useful to the country's economy: on the one hand as collectors of pension savings, on the other as lenders of the productive economy. Taking into consideration the tax incentives introduced by the recent legislation, the Association intends to find a synthesis of the system that creates the conditions to allow pension funds to allocate, freely and voluntarily, at least a part of their pension savings to finance the real economy and infrastructural development. This in exchange for good returns and adequate risk control conditions for members".
The virtuous spiral has already started. Seven negotiated pension funds have invested or have taken the first steps to invest in the real economy, through investment funds or specialized mandates. As at 30 June 2017, the total amount of investments already made through instruments specialized in private debt, private equity, infrastructure and renewable energy amounted to 122,5 million euros, equal to 0,3% of direct investments and in total fund management pension. The overall commitment undertaken is equal to 331,7 million euros, of which 181,7 in Italy. The largest share goes to investments in private debt (74,1%), followed by private equity (16%), renewable energy (7,2%) and social housing (2,8%).
The yields of negotiated pension funds
in the first six months of 2017 the average return of the set of negotiated pension funds it was +0,9%, not far from the revaluation rate of the TFR (+1,1%). The result was influenced by the negative performance of the bond market in the half year.
In the medium-long term, the performance of occupational pension funds largely exceeds the revaluation of the severance pay. From 2008 to June 2017, the average return was +36,5%, while the severance pay increased by +22,5%. Considering the time span of the last 5 years, from 2012 to 2016, the gap is even clearer: +29,1% for occupational pension funds against +8,9% for revaluation of severance pay.
Where the negotiated pension funds invest
- direct and indirect investments amount to 47,3 billion euro (figures as at 30 June 2017). Of the total, 45,9% is invested in government bonds, 20,4% in shares and other equity securities, 17,6% in bonds, 8% in mutual funds and ETFs, 7,2% in bank deposits and the remaining 0,9% in other assets. Compared to the end of 2016, the share of government bonds decreased significantly (it was 55,1%) in favor of a greater presence in the portfolio of bonds, shares and other equity securities, funds and bank deposits.
At the end of 2016, 32,3% of the investments of contractual pension funds were allocated in Italy, 46,6% in other European Union countries, 20,7% in other OECD countries and 0,4% in Countries outside the OECD. Of investments in Italy, the vast majority is represented by government bonds (83,5%), followed by bank deposits (9,3%), bonds (3,8%), shares (3,3%), fund units and ETFs (0,1%) and from bank deposits (9,3%). This means that just under 1 billion euro is invested by contractual pension funds in Italian companies through the purchase of equity securities or debt securities.
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