ITALY - The €1.7bn Fonchim scheme, the closed fund for chemical and pharmaceutical workers, has appointed Schroders to manage its Trattamente di Fine Rapporto (TFR) assets.

Under a new law recently implemented, severance payments (TFR) made by companies with over 50 employees must be transferred into pensionfunds, unless employees specifically choose for their money not to gointo the second pillar.

In such a case, the TFR funds will gointo the INPS social security state fund while TFR funds accrued until2007 will remain with the companies.

Andrea Girardelli, director of Fonchim, told IPE today: "The mandate looks very small and so far we have few people, because only the so-called ‘silent people' go into that compartment: you say ‘yes' if you don't say ‘no'."

As a result, Girardelli told IPE he does not expect the number of people in this category to grow significantly.

This mandate comprises the Fonchim fund's fourth ‘compartment'. Around 90% of the assets are invested in its stabilitá compartment - mostly invested in short term fixed income - while 5% of assets are in the crescita compartment - holding a 60/40 split between equities and bonds - and the moneta compartment, which is invested 100% in equities.