The Italian government has given its final seal of approval for a new kind of auto-enrolment that will come into force on 1 July 2026.
The move is intended to boost membership in pension funds and is part of the country’s budget law for next year.
Under the new regime, workers will automatically enrol in an industry-wide pension fund (Fondi Pensione Negoziali), if they don’t explicitly decide how to allocate the severance pay Trattamento di Fine Rapporto (TFR) within 60 days from the start of a new job, so-called silenzio assenso (tacit consent).
Employees already working in a company, and already enrolled in a supplementary pension scheme, must choose a supplementary pension plan to allocate their severance pay, otherwise the tacit consent mechanism will apply.
Workers can still opt to keep the accrued severance payments in the company, or allocate them to a complementary form of pension including open pension funds (fondi pensione aperti) or private pension plans (PIP).
The tacit consent approved today by Italy’s parliament applies retroactively, with the enrolment in a supplementary pension scheme starting from the date of hiring. The timeframe given to workers to choose how to allocate the severance pay is cut from the the current six months to 60 days.
Additionally, the new budget law extends the effects of the tacit consent mechanism, allowing the payment of contributions to the supplementary pension scheme by the employer and the employee based on collective bargaining agreements, or contracts, including those at company level, signed to establish a supplementary pension scheme, according to a report of the labour committee in the parliament.
Employees’ participation in supplementary pension schemes in Italy remains low, at 38.3% of the labour force, or 27.6% when excluding members not contributing to their individual accounts, according to a report published by pension regulator Covip.
Of a total €32.70bn severance pay accrued, only €8.16bn flows to complementary pension schemes, while €17.60bn stays in companies and €6.50bn goes to the the treasury fund (Fondo di Tesoreria) of the first-pillar pension authority Istituto Nazionale Previdenza Sociale (INPS), figures in Covip’s report show.
Italy first introduced auto-enrolment through tacit consent in 2007, a move that led to a 43.2% increase in the number of members in pension funds, from 3.2m to over 4.5m, according to think tank Itinerari Previdenziali.
In the following years, however, the initial boost provided by the introduction of the mechanism faded.
Santo Biondo, confederal secretary of the Italian Labour Union (UIL) told IPE that, like in 2007, an educational campaign on the topic of supplementary pensions is necessary with the introduction of a new kind of tacit consent.
The auto-enrolment measure approved by the parliament today is “positive but incomplete”, because workers can decide to opt-out without a campaign explaining the financial benefits of occupational pensions, he added.
Asset management association Assogestioni will “intensity initiatives” to educate young people on long-term investing, said director Fabio Galli.
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