Italy’s pensions regulator COVIP has moved to simplify the approval process schemes need to go through in order to invest directly in investment funds, rather than using an intermediary. 

The regulator last month issued new guidance for fondi negoziali, Italy’s industry-wide schemes based on collective labour agreements. 

In a letter to the pension funds, sent on 24 January, COVIP said they no longer had to have approval from a full meeting of stakeholders in order to change their rules to allow such investments.

The circular told the funds how they had to change a particular section of their scheme rules in order to make such direct investments.

After updating scheme rules these statutory changes simply had to be communicated to COVIP and approved by the fund’s board of directors, without the need to submit them to an extraordinary shareholders’ meeting.

The legislation 252/2005 – referred to in the letter’s heading – provides for complementary pension schemes to have the option of carrying out forms of direct investment by buying shares in real estate companies, as well as shares in closed investment funds or real estate mutual funds, COVIP explained.

These investments are subject to certain limits.

A spokesman for COVIP said that even though this type of direct investment had been provided for by the 252/2005 legislation, up to now they had rarely been used by the majority of fondi negoziali.

“With this note, the authority intends to simplify the administrative procedures, if any pension fund wants to use this type of investment, and this option has not already been provided for in their articles of association,” he said.

COVIP also reiterated the need for pension funds’ boards of directors – if considering using direct investments – to make sure that the fund’s internal organisational structure was “equipped with the professional requirements appropriate to the risks and the characteristics of the financial instruments in which it intends to invest”, the spokesman said.

The regulator’s circular followed an announcement from one of Italy’s fondi negoziali that it had made direct investments in the course of 2017. Prevaer, the air transport pension fund, said it made three direct investments last year with no intermediary.

These included a €5m investment in Fondo Italiano, which invests in small and medium-sized Italian businesses; €10m in BlackRock’s European fund, and another €10m in a Macquarie fund investing in infrastructure companies.

Prevaer said the deals amounted to around 6% of its total assets.