The introduction of individual long-term savings plans, the so-called PIRs, is the main tax change in recent years for managed savings. If this small revolution is successful, the benefits could be considerable and for various subjects: first, for Italian companies, which will be able to enjoy broader and more liquid access to the financial market to procure the capital needed to invest and grow; secondly, for final investors, who will be able to benefit from particularly favorable tax treatment, against the commitment to hold the investment for at least five years; thirdly, for the probable stimulus to the economy that would derive from a stronger and more competitive “Italian System”. There is also a fourth, no less important, positive effect: the contribution to the diffusion of a long-term investment culture, which is badly needed in Italy.
But, going in order, what are PIRs? Long-term individual savings plans (PIR) are a new investment method that offers an important tax incentive to savers who will focus, with a long-term logic, on Italian companies. In particular, investments made in PIRs by natural persons residing in Italy, if held for at least 5 years, allow for exemption from taxes on any capital income, which today reaches 26%. Each natural person can own only one savings plan during his life and can invest up to 30 euros a year, up to a total of 150 euros. Specifically, by investing 30 euros today in a fund or other financial product classified as PIR, from 1 January 2022 he will be able to redeem the position without paying taxes on the capital gains.
In order to be "PIR compliant" and therefore benefit from the tax relief, an investment must comply with certain constraints. In particular, it is necessary to invest at least 70% in securities (shares and bonds), issued by Italian or European companies with a permanent establishment in our country. Furthermore, at least 21% of the portfolio must be made up of securities issued by companies not included in the FTSE MIB index, in other words issued by medium and small capitalization companies. The remaining 30% of the portfolio is unconstrained.
Some observers fear that a portfolio constructed in this way is too concentrated on "Italy risk". Is it a well-founded fear? First we must take into account the "starting point": the typical securities portfolio of a private investor is composed of a handful of securities, usually domestic. Therefore, to the extent that PIR investments will replace do-it-yourself portfolios, the effect on Italian investments will be to benefit from greater diversification.
On the other hand, it is obvious that a "PIR compliant" portfolio will have a less diversified exposure than a fund with a European or international investable universe. But this also applies, for example, to equity or bond funds specializing in a single country, which have been around "forever" and which have never attracted criticism for this. It is clear that a country equity fund should not constitute 100% of an individual's financial assets, but be a "brick" in a more complex overall portfolio, with the remainder highly diversified internationally.
And what about costs? As with all investments, they are a component to be studied carefully. It is important that they are in line with those of alternative products that offer the same risk profile, so that the tax advantage of PIRs ends up in the pockets of the final investors. Among other things, as for the other funds, also in the case of the PIR the subscription commissions can be "discounted" by the placers.
Our conclusion is that PIR funds, if used cum grano salis, could be an interesting investment for Italian families.
* Claudio Tosato is the Product Director of Anima Sgr
