Italian pension industry struggling - regulator
ITALY - The pension fund industry “is struggling to take off”, says the head of pension regulator Covip.
Presenting Covip's annual report for 2004, Luigi Scimia said: "The pension fund industry is struggling to take off, at least in terms of membership.”
He said that the slow pace of development was due to a lack of information, especially among young workers, whose first pillar pension will be reduced by 19 percentage points to 43.7% by 2050.
Scimia, who was appointed last August, said that the pension provision industry in 2004 was worth €41bn – of which €30.5bn pertains to funds in existence before 1993.
At the end of 2004, Covip regulated most of these funds, worth a total €27bn.
Membership to post-1993 funds, which are worth €8.1bn, grew "only just 2.7" in 2004 Scimia told the event, which also featured welfare under-secretary Alberto Brambilla.
Individual insurance (PIP), which Scimia said was more expensive but yielded better returns, saw 23% growth. He said that joining a pension fund made better financial sense for a worker from the cost point of view.
Lower costs were likely to attract more members to pension funds, Scimia suggested - but warned that "proper management" must be "properly rewarded".
He also warned Italian asset managers not to underestimate international competition. Cross-border competition was not "all bad", he added.
He told IPE that the EU directive on occupational pension funds, which should be implemented in member states this September, could benefit rather than threaten the Italian pension industry.
"I think there is more a chance of foreign pension funds settling in Italy than the reverse," he said.