ITALY - A planned review aimed at allowing Italian pension funds to diversify into higher yielding asset classes has been put on hold, IPE has learnt.

The treasury ministry decree 703/1996, setting out the criteria to be followed by the management of pension funds with regard to investments and the limits on investments and derivatives transactions, had been under review since last year.

Currently, the open-ended, contractual and multi-employer pension funds are not allowed to invest in alternatives or take up short positions.

Pre-existing pension funds, those founded before 1993, and social security entities, the first pillar casse di previdenza dedicated to self-employed categories of workers, can make such investments.

Under the proposals being brought forward, all pension funds would be able to invest in less liquid but previously deemed higher yielding asset classes such as hedge funds and private equity.

Draft reforms about the flexibility of investments for pension funds were supposed to come into force in June and a new draft was expected to be issued by December.

But the treasury has decided to deley the proposals for now, due to the financial crisis.

Italian regulator Covip has decided to temporarily relax the rules on the maximum percentage in cash pension funds are allowed to hold, which until now was fixed to 20%.

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