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Impact Investing

IPE special report May 2018

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Italy: COVIP weathers the storms of Italian politics

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Covip annual statement:
• In 2013 membership of private pension schemes increases, albeit slowly, at 5.3% adding 290,000 more members to the total 5.8m.
• Funds have grown between 8% and 9% in 2012, compared to 2.9% growth of the trattamento di fine rapporto.

As with many others whose life depends on Italy’s political fate, the Italian regulator for the private pension investment sector has had a difficult job this past year. The Commissione di Vigilanza sui Fondi Pensione (COVIP) has had to stay afloat and keep functioning during the long political stalemate earlier this year.

In the meantime, it lost its chairman Antonio Finocchiaro, whose four-year mandate came to an end in February, as well as Finocchiaro’s second-in-command Giuseppe Stanghini, whose tenure ended in May.

The commission is now run by former trade union secretary and commissioner Rino Tarelli, who spoke to IPE about COVIP’s annual statement, published in June. The COVIP annual statement is a much-anticipated document by all in the industry, and each year it offers new talking points despite describing a somewhat slow-paced market. Tarelli says membership grew in 2012, albeit slowly at 5.3%, which equates to around 290,000 more members in 2012 and around 5.8m members in total.

In terms of assets, the private pension investment sector last year added €104m. The commissioner, however, reported a positive developed from the COVIP statement: in 2012, the returns of Italian private pension funds (including all the different types of private pension investment in the country) have been very impressive, between 8% and 9%  on the whole. This compares to the 2.9% growth of the trattamento di fine rapporto.

“It shows the quality of this source of future savings for Italian workers,” Tarelli says. “While the growth in membership is positive in such a difficult economic environment, we still worry about improving membership in relative terms. We are trying to spread the message in every medium. At COVIP we believe that this should primarily be a duty of the government and pension schemes themselves. We are happy to contribute to this cultural change, but the political class and schemes should step in.”

Tarelli adds that Italian lawmakers have intervened as many as 21 times on pension law since the first major reform in 1992 made by the Giuliano Amato government, and, therefore, COVIP should do what it does best instead – which is interpreting and enforcing the law and building a constructive dialogue with pension schemes.

 “We have given pension schemes the regulation they need and tried to make sure everybody understands and applies the principles of pension investment. Pension schemes in Italy need to focus on earning a deferred salary for their members, and the emphasis on risk management should be as high as ever,” Tarelli concludes.

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