Italy Investment and Pensions

From July 2026, new private sector hires in Italy are enrolled in a second-pillar industry-wide fund, as part of wider reform of Italy’s pension system. This form of soft auto-enrolment, with room for opt-out, had already been tried by the Italian government in 2007, but with modest success in terms of increased supplementary pension coverage. The reform also allows employees to transfer their pension savings more freely, which critics argue is a gift to banks and insurers. But this measure shows the government is finally catching up to the issue of poor second-pillar coverage, in a country that relies on an increasingly unsustainable public pension system. Second-pillar assets remain a relatively small fraction of GDP, but they are growing nicely and the reform should give a welcome boost to this pool of savings. Meanwhile, pension funds are increasingly diversifying their investment strategies and increasing their participation in domestic markets, which bode well for Italy’s pension industry and the wider capital markets.