Relevant numbers, capital consistency that testify to the solidity of the category: over 4 million workers are enrolled in 32 occupational pension funds at the end of 2023, with higher accumulated savings earmarked for future social security benefits to 67 billion euros: it is the most relevant category of pension funds both from the point of view of existing positions and from a capital point of view.
Pension funds, the numbers
Giovanni Maggi, President of Assofondipensione, the association of occupational pension funds, in his report to the 2024 Assembly, yesterday in Rome, put the numbers in black and white: “Considering the audience of public and private employees, almost 40% have a position of supplementary pension schemes and among these 48% have chosen a negotiated pension fund. The Italian supplementary pension system collects assets that at the end of 2023 had a value of 223 billion euros and the negotiated pension funds represent the most significant share among the various social security forms, managing 30.5% of the total. During 2023, supplementary pensions raised 14.6 billion euros (without considering pre-existing pension funds), of which 44% were negotiated pension funds alone.”
Despite in 2022 a negative result has been recorded, due to the financial market crisis caused by anti-inflationary monetary policies and geopolitical tensions, the long-term analysis (10 and 15 years) shows that the returns of pension funds exceed the revaluation of the severance pay. Results that benefit from a particularly competitive cost structure. The President of Assofondipensione gave as an example the set of “Balanced” sectors, which see an annual cost (covip source) equal to 0.38% for negotiated pension funds compared to 1.45% for open pension funds and 2, 13% of PIP-individual pension plans.
Modify taxation to incentivize the system
For incentivizeand the investment of pension funds in Italian private businesses, argued Maggi, “the tax advantage could be remodulated which was conceived for PIRs and then extended to pension investors, which allows the returns on investments made in Italian companies to be exempt from taxation”. This is a regulation that is not easy to apply and is subject to regulatory uncertainties.
“A Sclarification of the criteria and an expansion of the area of application to asset classes such as private debt – stated Maggi – would further incentivize occupational pension funds to engage in this type of investment. Still on the tax front, the President of Assofondipensione added, a simplification would be useful by overcoming the pro-rata mechanism for pre-2007 members and the taxation of returns on “accrued” in favor of the “realized” criterion. It would also be appropriate, according to Assofondipensione, to reflect on a remodulation of the pension benefits available for those who are members of the complementary pension scheme, since the life annuity market has proven to be ineffective in offering solutions adequate to the needs of the sector. Last but not least, workers who have seen their TFR flow into the INPS Treasury Fund, as employees of companies with more than 50 employees, should be allowed to pay it to pension funds as “Previous severance pay”, in the event of subsequent membership, thus overcoming the discrimination that currently exists with workers in companies with fewer than 50 employees.
Push on young people
Furthermore, Assofondipensione “considers one fundamental new information campaign, associated with a new time window of choice which could see a remodulation and updating of the silent consent mechanism, with mechanisms which, while respecting the voluntariness of membership, can better favor registration and younger workersfrom the beginning of the professional career, even in periods characterized by less stability of the working relationship. For example, “an investment strategy consistent with the time horizon of the interested party could be envisaged as a default option, since a guaranteed segment can be very penalizing for those who are very far from retirement. It is therefore appropriate to fully encourage and simplify as much as possible transparency, l'bringing younger workers closer to joining pension funds that cover a need that young people too often are not aware of and in which they do not show adequate interest'.
