Over 4 million Italian workers have chosen to look to the future with over 32 contractual pension funds at the end of 2023, accumulating savings earmarked for their future performance in total more than 67 billion of Euro. These pension funds have become the main point of reference both for the number of participants and for the assets managed. This is what emerges from the report presented by Pension funds during the 2024 assembly.
The boom in occupational pension funds
The president of Assofondipensione, John Maggi, underlined that almost 40% of employees, both in the public and private sectors, have chosen to supplement their pension with a supplementary pension fund, and of these, almost half have opted for a negotiated pension fund. These data demonstrate the growing importance of complementary pensions in the Italian panorama, with total assets reaching 223 billion euros at the end of 2023. “During 2023, complementary pensions raised 14,6 billion euros without considering the pre-existing pension funds, of which 44% are negotiated pension funds alone,” explained the president.
Despite the challenges of financial markets in 2022, pension funds have demonstrated that they have a long-term vision, exceeding the revaluation of the severance pay in the last 10-15 years. This was also made possible thanks to a competitive cost structure, as evidenced by the low annual costs of the Balanced segments. Maggi gave as an example the set of "Balanced" sectors, which sees an annual cost (source Covip) equal to 0,38% for occupational pension funds compared to 1,45% for open pension funds and 2,13% for PIP-individual pension plans.
Assofondipensione: Real Economy and Esg governance project
Assofondipensione has also played a fundamental role in supporting the Italian economy through Real Economy Project, public-private collaboration between Cassa Depositi e Prestiti (Cdp) and negotiation funds through Assofondipensione, which made it possible to activate resources of approximately 1,15 billion euros, investing in small and medium-sized businesses in various sectors. Investments must be consistent with ESG principles towards which occupational pension funds, and their workers, are highly sensitive. As of 30 June 2023, the Fof Pei records a total value of the investment in relation to the invested capital greater than one: therefore the value of the Fund (valued at Fair Value) is already higher than the called capital. The internal rate of return (IRR) is satisfactory (4,5). Now we need to work, claimed the president of Assofondipensione, to further grow the funds of funds already operational also in new sectors to be involved, addressing the issue of the progressive aging of the population and the frontier of the silver economy.
Attention to environmental, social and governance sustainability was another focal point, with 13 pension funds starting to vote in a coordinated way at the meetings of the companies in which they hold shares. “The objective – stated Maggi – is to vote in 2024 in approximately 100 European listed companies, contributing to the improvement of their governance in compliance with the principles of environmental, social and governance sustainability (ESG) and according to guidelines discussed and shared in the context of the Association".
Tax reforms and demographic challenges for Italian pension funds
To encourage the investments of pension funds in Italian private businesses, Maggi proposed a review of the facilitated taxation, extended to pension investors, currently in force for PIRs. This legislation is complex and subject to regulatory uncertainties. A simplification of the criteria and an expansion of the area of application to private debt could further incentivize occupational pension funds to engage in this type of investment. Also, one tax simplification eliminating the pro-rata mechanism for pre-2007 members and the taxation of returns on "accrued" could encourage greater membership. It is also necessary to reflect on a remodulation of the pension benefits available for members of the complementary pension scheme and allow employees of companies with more than 50 employees to pay the severance pay to pension funds as "prior severance pay", thus overcoming the current discrimination compared to workers of companies with fewer than 50 employees.
THEdemographic winter is another aspect to consider. According to the Italian Statistics Center, the total population continues to decline, with the number of over 65s exceeding that of young people under 25. This could reduce the resources available to improve productivity and support development. A commitment to developing effective policies to support the family and the labor market is therefore essential.
Finally, the vice president of Assofondipensione, Ignazio Ganga, underlined the importance of Italian pension funds as a positive experience, capable of creating value in the long term and offering satisfactory returns with low costs. He underlined the need for greater commitment on the part of the government to support the development of supplementary pension provision and to promote greater awareness of pension provision, especially among young people.
