ITALY – Fondo Scuola Espero, the state-backed pension fund for 1.1m school employees, is likely to hit its preliminary target of 30,000 members by next summer, according to one of its architects.

“I am certain that our initial 30,000 members target will be fulfilled by this summer,” said Piero Bottale. He added that private school staff would be eventually allowed to join Espero - pushing its potential membership to nearly 1.5m.

He said recruitment is in its early stages and many potential members are still to be briefed about Espero. But he stressed that those already approached had been “very interested”.

Current membership consists of “hundreds”, added Bottale, a member of the national trade union Uil.

Espero was authorised last May by pension regulator Covip to provide an extra pension cover to public schools’ staff from nursery to university, which makes up one third of public employees but have been so far barred from joining a pension scheme.

The background to the launch of Espero is that before the fund began its activities last September, school staff severance pay, Tfs, could not be used to finance a pension plan. This was contrary to the private sector indemnity, Tfr, which is the backbone of the second pillar.

Now employees hired from 2000 can have their Tfs converted to Tfr. The state would pay two percent of Tfr into the fund and an extra 1.5% contribution, while employees would pay one percent of their salary in the fund. The state as their employer would pay the same amount.

Workers hired from 2001 get a ‘virtual’ Tfr and are required to pay it in the fund, as well as the one per cent quota. As further incentive the state also pays 0.5% cash into the annual contributions for those who join this year.

Once the fund gets 30,000, as assembly would be elected, which in turn would elect the administrative board, currently consisting of members named by the ministry of education.

Bottale said the next move would be concluding the selection process for a deposit bank, and looking for asset managers for the €2.58 a members contribution paid by the state. The same amount is required of members as joining fee.

The fund’s asset allocation would not “greatly differ from other pension funds’” and could be 70:30 bonds-equities, Bottale continued.

The Tfr and the extra 1.5% contributions will be managed by National Institute of Social Security for the public sector INPDAP, which would also be in charge of “ all administrative aspects” he said.