Back to talking about Individual savings plans, better known as PIR, financial instruments that met with resounding success in 2017. Last year, aided by market difficulties, funding was significantly reduced, but PIRs continued to play a leading role in the universe of managed savings. From 1 January 2019 the block. For almost a month, savers who want to invest in PIR have not had the opportunity to do so. The reason is obvious: the Lega Government - M5s, with the 2019 Budget Law, introduced new rules on PIRs that could tangibly change their profile. To try to understand how and how much though there is a need for an implementing decree explaining to the managers what to do. Until then, the collection of PIRs will remain suspended. Only those who have already subscribed to the PIRs in the past can feed them with new investments.
In the meantime, pending the necessary clarifications, many asset management companies have expressed strong concern regarding the changes established in the Maneuver, considered a real danger that jeopardizes the liquidity inherent in the instruments, at the same time exposing savers to greater risk.
PIR: WHAT ARE THEY AND HOW DO THEY WORK?
Introduced by the Renzi Government for the purpose of channel savings to Italian companies, the PIRs are containers within which the investor will have the possibility to place different types of financial instruments (shares, bonds, UCI units, derivative contracts) or sums of money, however respecting certain conditions: at least 70% of the total value of the PIRs must be invested in instruments issued or stipulated by companies resident in Italy or foreign companies that have stable activities in Italy. Of this 70 percent, at least 30% must be invested in financial instruments issued by companies other than those listed on the FTSE Mib. The remaining 30% of the portfolio can be committed to any instrument, including deposits and current accounts.
Anyone who complies with these rules and keeps their money in the PIR for at least 5 years will be able to count on total tax relief on profits.
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PIR: CHRONICLE OF AN UNEXPECTED SUCCESS
Attracted by the tax relief, in 2017 Italian savers moved en masse towards PIRs. Against a forecast of around 5 billion euro, in the year of their debut individual savings plans collected more than double: 11 billion euro invested by almost 800 subscribers who on average "paid out" 13.500 euro. In just one year, PIRs “conquered” 8 percent of the free float of Mid Cap, 6% of Small Cap and even 10% of AIM Italia.
The collection of 2018 was positive, but far lower, which stopped at 4 billion euros. In this context, however, it is necessary to consider the strong volatility that characterized the markets in 2018 and in particular the difficulties that hit the asset management industry, whose funding closed at 7,3 billion euros compared to the 97,5 billion collected in 2017.
PIR THE NEWS OF THE MANEUVER
The 2019 Budget Law provides for important changes on PIRs. Two more are added to the rules already mentioned: You will have to invest the 3,5% of the total on SMEs listed on the Aim Italia index who have less than 50 million in turnover and fewer than 250 employees. A further 3,5% will instead have to go to shares or funds Italian venture capital.-\
The rules are not retroactive, so they will apply to PIRs opened after 1 January 2019 and not to earlier ones.
The purpose is clear: to encourage the growth of companies and start-ups, pushing on innovation, but we must consider that today there are about twenty venture capital funds on the Italian market, while the start-up world on which we want to convey the investment remains rather nebulous for savers. In practice, as many managers have pointed out, the PIRs will be assigned tasks that do not belong to them.
Obviously, details and clarifications are needed on these changes which will come through the classic channel of the implementing decree which explains to the managers how to set up new PIRs. In theory there would be time until April, but the Government has assured that the provision will be dismissed by February in order to avoid the total paralysis - already underway - of the market.
PIR: THE CRITICISM
There are two fundamental criticisms of the new stakes introduced by the Conte government. The first concerns the fact that the new rules distort the fundamental characteristics of an open fund, compromising its liquidity. The second, consequential, is the raising of the risk profile of PIRs, born on the contrary as a conservative tool.
She also spoke on the matter Assogestioni which, through a circular, underlined that "it cannot fail to highlight how the new investment restrictions introduced so that a UCI (collective investment institution) can qualify as 'PIR compliant' do not ensure compliance with the liquidity and valuation requirements provided for Ucits” (Undertakings for Collective Investment in Transferable Securitie) by the European directive of July 2009, “aimed at not compromising the Oicr's obligation to redeem the units at any time”.
Previously, on the pages of the Sun 24 Hours, the director of the Assogestioni Research Office, Alessandro Rota, "with the obligation to invest minimum quotas in venture capital funds, there is the risk of intervening on an instrument that works to make it do what it cannot do".
