Italian first pillar pension funds required to draft investment strategy document

Italy’s first-pillar pension schemes, the ‘Casse di Previdenza’, are being required to define and submit formal investment strategies, under new guidelines drafted by the country’s labour and finance ministries.

The proposed rules, covering pension funds with combined assets of €124bn, also ask the schemes to prioritise allocations that support the domestic economy, according to Italian news agency Ansa.

Each fund will be required to draw up an investment strategy document outlining the risk-return profile of its portfolio. This must be submitted “promptly” to the ministries of labour and economy – the two supervising authorities – as well as to pension regulator COVIP.

The strategy must be reviewed at least every three years, while pension funds will also be expected to publish an annual prospectus summarising its financial activities.

According to the draft text, the pension schemes must adopt diversification policies to mitigate concentration risk across issuers, corporate groups, sectors and geographies.

In line with a broader political goal to boost domestic economic growth, the guidelines encourage allocations to infrastructure, energy transition, environmental systems, urban regeneration and the construction sector.

The rules also require schemes to put in place measures to identify and manage conflicts of interest to safeguard member and beneficiary interests, and to disclose how ESG factors are integrated into investment decisions.

Although initially outlined in a 2011 decree under the government of Silvio Berlusconi, the measures were never implemented. The current government, led by Giorgia Meloni, is now expected to finalise and enact the guidelines by the end of July, according to Federico Freni, undersecretary of state at the Ministry of Economy and Finance.

“The new rules clearly state that the ‘Casse di Previdenza’ have been, and will continue to be, serious and reliable investors,” Freni told Il Sole 24 Ore.

“No one denies difficulties associated with the erosion of the underlying assets [of some pension funds], but their role as a pillar of [Italy’s] real economy is beyond question,” he added.

Each pension fund will subsequently have to update its internal rules to align with the new regulatory framework, which Freni said should be seen not as a constraint on investments, but as a set of safeguards designed to support more effective portfolio management.

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