Assets for pension pay-outs in complementary pension funds in Italy rose by 6.7% year-on-year in 2020 to €197.9bn, mainly driven by the €16.5bn increase in contributions, while outflows to pay benefits and other operating costs amounted to €8.6bn, according to an annual report published by pension regulator Commissione Di Vigilanza Sui Fondi Pensione (COVIP).
Total assets equalled 12% of Italy’s GDP, the report added.
COVIP noted that out of total assets, €161.8bn is invested by complementary pension funds, up from €150.3bn in 2019.
The figure excludes reserves of pre-reform funds (fondi pre-esistenti) but held with insurance companies (€28.1bn), pension funds of banks, insurance companies and non-financial companies (€1.4bn), and €7bn of “old” individual pension plans provided by life insurers (PIPs).
The consequences of the COVID-19 pandemic on the Italian complementary pension system was “quite contained”, the regulator said in the report, adding the system has reacted rapidly to the shock.
Investments in bonds amounted to 56.1% of the total last year, down by 1.8 percentage points year-on-year at €90.8bn, while equities made up 19.6% and collective investment undertakings (UCITS) 15.5% compared to 14.8% the prior year.
Among government issuers, the share of Italian government bonds fell further in portfolios, from 20.6% to 17.5%, decreasing from €30.9bn to €28.4bn.
Italian public debt made up 47.1% of government bond portfolios, a decrease of 4 percentage points compared with 2019.
The share of corporate bonds grew to €30.6bn, or 18.9% of the total investments in 2020, from 17.7% in 2019.
Real estate investments totalled €3.2bn last year, with €1.2bn of direct investments and the remainder consisting of equity investments in real estate companies and shares in real estate funds – the latter mostly in the hands of pre-reform funds.
The investments of complementary pension schemes in the Italian economy, meaning securities and real estate, stood at €38.6bn last year, down from €40.4bn in 2019, making up 23.8% of the total, three percentage points less than the prior year.
The first pillar funds – casse di previdenza – held total assets of €96bn at market values at the end of 2019, up by €9bn compared with 2018. The largest share of the assets, €36.4bn, was allocated to bonds, €19.9bn to real estate and €16.7bn to equities.
Industry-wide pension funds – fondi pensione negoziali – returned 3.1% in 2020, up from average net returns of 2.5% in the last three years, mainly due to equity options yielding 5.6%, according to COVIP.
Open pension funds – fondi pensione aperti – returned 2.9% and the new individual pension plans (PIPs) 1.4%. Unit-linked PIPs saw instead a negative return of -0.2%. The severance pay system – Trattamento di Fine Rapporto (TFT) – appreciated by 1.2% net of taxes.
The total number of members for complementary pension schemes reached 8.4 million in 2020, up 2.2% compared to the prior year.
COVIP counted 372 pension funds in Italy at the end of 2020, including 33 fondi pensione negoziali, 42 open pension funds, 71 PIPs and 226 pre-reform pension funds.
Fondo Priamo is on positive returns path
Fondo Pensione Priamo, the second-pillar pension fund for the Italian public transport industry, has continued to record positive returns for its sub-funds in the first quarter of this year.
Its bilanciato sviluppo sub-fund returned 1.44%, the bilanciato prudenza 0.90% and the garantito protezione yielded 0.08%.
The scheme achieved good results by strengthening controls within financial management and simultaneously taking advantage of market opportunities, it said.
Volatility and a financial markets downturn in the first quarter of 2020 hit the pension fund’s performance, it said. The sub-funds, however, largely recovered, with returns of 4.64% for the bilanciato sviluppo, 1.50% for the bilanciato prudenza and 0.10% for the garantito protezione recorded at the end of last year.
Priamo has assets under management of €1.9bn, split into €1.3bn for the bilanciato sviluppo, €443.3m for the garantito protezione and €112.1m for the bilanciato prudenza sub-funds.