ITALY- The president of the Italian pension regulator Covip says the Ministry of Economy is to extend regulations to the 510 pension funds – worth 29.8 billion euros – that were set up before the 1993 Dini reform.

In his annual report, Lucio Francario said the draft of the law to align regulations is currently being processed.

Covip’s provisional annual report says there are 510 pre-1993 pension funds - 360 of which under its supervision.

Francario said the structure of the country’s second pillar was efficient - drawing a parallel between the Enron pension fund, 60% of which had been invested in company shares, and their Italian counterparts, which are protected from conflicts of interests and high-risk exposure.

Of the funds under Covip’s supervision, seven had invested a total of 14 million euros in Parmalat bonds and two had invested in Cirio.

A Covip official explained each of the 510 funds, although not free from regulations, potentially constitutes a special case because they are not obliged to abide by the 1993 laws.

One of the differences between the pre- and post- 1993 funds is in investment procedure. New funds are required to appoint external asset managers, while the pre-1993 ones could be internally managed.

Some of them run defined benefits schemes, in comparison with post 1993- funds that are required to run only defined contribution ones.

“The Ministry of Economy, in agreement with Covip, will lay down the investment procedures for the pre-existing funds, once the dispensation period of 10 years is over, by conforming their line of administrative conduct with those of the newly instituted funds,” Francario stated.

The initiative was inspired by “the fundamental principle that pre-existing funds abide to the same rules of prudent management that apply to managers of new funds”.

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