ITALY - Italian industry-wide pension funds rose five percent in 2003, Covip president Lucio Francario said in testimony to parliament yesterday.

Francario, head of pension regulator, Commissione di Vigilanza sui Fondi Pensione, Covip, was speaking at a session attended by four committees from the lower and upper chambers, Camera dei Deputati and Senato.

“The positive performance can help develop confidence in pension funds and help spread the conviction among workers that integrative pension is necessary for a more serene old age” he said.

By 2050, the president explained, a retired worker would be entitled only to 48.1% of his wages, versus the 67.3% allowed to pensioners in 2000. “Hence the necessity of granting more substantial cover, in a bid to avoid new poverties.”

The Covip president also took the opportunity to stress that pension funds, “by virtue of their of their mission, to coincide with the interest of the investors” cannot be seen as financial intermediaries for profit.

The nature of pension funds, he continued, “justifies the need of a specific and pronounced attention to the peculiarities that distinguish them”.

A differentiation between stability and transparency could not be “concretely proposed” for the management of pension funds where supervision of the stability and transparency go hand in hand.

The forthcoming pension bill, Francario said, aims at perfecting the supervision of governance, “through enhancing the professionalism and autonomy of asset managers and giving more value to involving employers and employees”.

According to the bill, Covip would be given the task of vouching for transparency in a bid to make sure that when they join pension funds, workers make well-informed decisions.

Francario also touched on the issue of co-operation between supervisory authorities, a hot topic since finance minister Giulio Tremonti proposed the setting up of a supervisory authority that would comprise Covip’s powers.

Covip’s president would welcome the prospect of a more intense cooperation though a data bank common to all supervising authorities, a suggestion already put forward by market regulator Consob, Commissione Nazionale per la Societa’ e la Borsa.

It would be “preferable to a more radical reform,” he said.

The FSA, Financial Service Authority, he pointed out - referring to the UK authority that is looked upon as a model, operates side by side with the Occupational Pensions Regulatory Authority, OPRA, which was set up specifically to look after pension funds, he concluded.

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