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COVIP figures show money flowing into Italian funds

ITALY – Money flowed into Italy’s complementary pension funds at a faster rate in 2012, with the funds’ total assets growing by 15.1% during the year to stand at £104.4bn – equivalent to 6.7% of the country’s GDP.

The year before, assets had increased by 9.1%, according to data from Italian pensions regulator, the Commissione Di Vigilanza Sui Fondi Pensione (COVIP).

In its 2012 annual report, COVIP said the new data showed the complementary pension system was solid overall, and had continued on a path of moderate growth.

Across all types of complementary pension fund, investments returned between 8% and 9% in 2012, it said, noting that this was well above the rate of appreciation for the TFR severance pay system of 2.9%.

The pension funds had benefited from the positive development on the financial markets in the period, it said.

Contractual pension funds posted an investment return of 8.2%, unit-linked PIPs saw an 8.9% return, while open pension funds reported an average return of 9.1%.

Pre-existing pension fund appeared to have returned around 6%.

The complementary system includes contractual pension funds (fondi pensione negoziale), open pension funds (fondi pensione aperti) and pre-existing pension funds (fondi pensione preesistenti), as well as individual pension plans provided by life insurers (PIPs).

Membership of complementary pension funds increased over the year by 5.3% to stand at more than 5.8m at the end of December.

Within these overall figures, the highest rate of growth was seen for the new type of PIP, where membership rose by 22% last year to 1.8m.

The complementary pension system – which supplements state pension provision – was well structured and well regulated, COVIP said.

It said it had held up well in recent financial crises and obtained significant results as soon as economic conditions improved slightly.

COVIP’s annual report included arguments and analysis showing that Italy could use complementary pension funds as a model for welfare provision in the future.

“The system of complementary pension provision could therefore act as a point of reference for the construction of a broadened welfare system, even including integrated healthcare, using private resources within the protection afforded by the public system,” it said.

The regulator said that, in 2012, it had continued encouraging complementary pension funds to have more organised managerial and organisational processes via new and amended regulation.

Checks on the average duration of debt securities and the annual turnover rate of the portfolio revealed changes had occurred during 2012, it said.

The average duration of bonds in the portfolios of all types of pension fund rose to 4.5 years from 3.7 years, while portfolio turnover decreased to 87.5% from 96.7%.

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