Fondo Fon.Te, the pension fund for Italy’s commerce, tourism and services sector workers, has invested a total of €560m in private markets, according to the scheme’s annual report introduced to the Senate, the upper house of the Italian Parliament.
The scheme has invested 70% of the sum in the real economy in Italy through impact-investing strategies, it said.
“We have set ourselves goals, we are deploying money, we are increasing assets, with €600-700m per year of contributions, and we will continue to invest. I would like to invest a bigger sum,” said Fondo Fon.Te’s president Maurizio Grifoni, referring to the call on pension funds to support the Italian economy.
Fon.Te had already earmarked €380m to private equity, private debt, infrastructure and venture capital funds.
Assets under management have grown to over €5bn, pushed up by positive returns on investments and contributions which, according to the fund’s preliminary budget, exceeded €600m at the end of last year.
The scheme’s director, Anna Maria Selvaggio, said: “2023 was the [comeback] year for double-digit returns on dynamic sub-funds”.
The number of members grew by 6% to a total of over 271,000. The scheme caters for over 41,000 member companies.
The re-evaluation of the severance pay – Trattamento di Fine Rapporto (TFR) – to the inflation level was one of the main drivers of an increase in the number of members last year, and contributed to the collection of a larger chunk of the TFR left in companies, the fund stated.
“Only last year we recovered a 40% of TFR that was left by the employees in the [hands of the] companies, and that have decided to transfer to the pension fund,” Selvaggio explained.
Moreover, companies benefit from tax deductions for transferring the TFR of 6%, in the case of companies with fewer than 50 employees, or 4% in the case of companies with more than 49 employees, Fondo Fon.Te added.
Companies paying employees’ TFR into the pension fund are no longer required to bear the burden of the annual re-evaluation of the severance pay required by law.
Call for hybrid pension system
Fon.Te is also in favour of changing current laws to guarantee workers access to second-pillar pensions with characteristics and methods similar to those envisaged for the first-pillar pension system, and from the first employment.
Grifoni said the idea of a hybrid pension system with a mix of a mandatory first-pillar and a complementary pension system would give members a pension level above 65% of wages.
Fon.Te would initiate a discussion with legislators and regulators to switch to a hybrid system benefitting the younger generation, he added.
The scheme added that the silent consent formula (formula silenzio assenso), where the transfer of the TFR to the pension fund takes place automatically if the worker does not otherwise indicate a preference, is certainly useful but structural. Non-transitory measures are necessary to strengthen the second pillar, it stated.
The scheme has opened up membership to self-employed professionals in the services sector since 2022, but more has to be done on tax deductions on member contributions, it added.
“We think that, with a labour market that has completely changed, the current rules on pension fund memberships have to make a qualitative leap, through more flexiblity to join [the schemes], guarantees for people who have employment gaps during working life, and communication depending on the age [of members],” Selvaggio said.