Italian first pillar pension schemes (Casse di Previdenza) and second pillar pension funds (fondi pensione) have increased the amount of investments abroad in the last few years, while cutting allocations to the domestic economy.

According to a report by Italian pensions regulator Covip, Casse di Previdenza have invested €37bn in Italy last year, or 34.3% of total assets under management, a decrease of 0.3 percentage points compared with 2020, while investments abroad amounted to €54bn, or 50% of total assets, a 2.2 percentage points increase year-on-year.

The Casse di Previdenza invest in Italy predominantly in real estate, €18.6bn or 17.2% of total assets, and in government bonds, €8.6bn or 7.9% of total assets, according to the Covip report.

Last year the Casse allocated €6.2bn or 5.7% of total assets to securities issued by companies in Italy, €697m to bonds, €5.5bn to equities, and €3.6bn to collective investment schemes.

The share of domestic investments in real estate fell by 1% last year compared with 2020, while the share of investments in Italian government bonds remained stable, the report showed.

Italian pension funds, instead, allocated €40bn of their assets to the domestic economy last year, equaling to 22.7% of total net assets, down by 1.1 percentage points compared with 2020, while foreign investments came to €124.2bn, equalling 70.4% of total net assets, up 2.1 percentage points compared with 2020, it noted.

In the five-year period of 2017-2021, the share of domestic investments carried out by pension funds fell by 7.2 percentage points, with the weight of government bonds decreasing significantly in investment portfolios by 5.9 percentage points, real estate  by 0.9 percentage points, and other debt securities by 0.4 percentage points, the report added.

Pension funds invest mainly in government bonds in Italy, €29.6bn or 16.8% of total net assets, down by 0.8 percentage points last year compared with 2020, while €3bn is allocated to real estate, €4.7bn to securities and € 2.7bn to collective investment schemes.

Overall, pension funds and Casse di Previdenza invest a total of €13.8bn in Italian companies.

Pension funds managed €213.2bn in assets at the end of last year, and the Casse di Previdenza €107.9bn, for a total of €321.1bn, equaling to 18% of the Italian GDP, the report said.

The five largest Casse di Previdenza – Enpam, Cassa Forense, Inarcassa, Cassa Dottori Commercialisti and Enasarco – managed 74.6% of total assets, up from 68.6% in 2011.

Casse di Previdenza allocate a large share of their assets, totalling €58.4bn, to collective investment schemes. Their real estate investments amounted to €19.8bn in 2021, down from €19.6bn in 2020, while investments in debt securities totalled €39.5bn, up from €36.4bn in 2020, and equity investments stood at €20.6bn last year, from €18.5bn in 2020.

The latest digital edition of IPE’s magazine is now available