The new chair of Italian pension regulator Covip, Mario Pepe, has called for an emergency plan to counter Italy’s demographic decline, which puts the stability of the country’s pension system at risk over the next two decades.

In his remarks at the Italian parliament, upon publication of the regulator’s annual report, Pepe said the country should seek support from the European Union to deal with the issues caused by Italy’s ageing society and the low birth rate.

“We must finance families [to support the birth rate] with European debt,” Pepe said.

Italy faces the prospect of a demographic transition that will irrevocably change the structure of families.

The forecasts point to a birth rate of less than one child per couple, or 1.20 per couple, if the impact of immigration is considered. However, that level is below what is needed to ensure the stability of the country’s pension system.

“We have to do our part to reach 2.2 [children per couple]” to keep the pension system in balance, Pepe said. 

The birth rate in Italy continued to fall during the first months of this year. According to the Italian National Institute of Statistics (ISTAT), it fell by 8.3% compared to the same period last year.

The emergency plan to boost the birth rate should involve the establishment of a “piggy bank” at birth, Pepe added.

This would consist of a social security benefit, which citizens would be able to access upon reaching 18 years of age. It might be used to pay, for example, for education, he noted.

In his speech, the COVIP chair highlighted the role that second-pillar pensions play in supporting the financial sustainability of the pension system.

At the end of 2024, membership of second-pillar pension funds stood at almost 10 million, up 4% from 2023, according to Covip’s annual report.

Assets under management of second-pillar pension funds reached €243.4bn in 2024, an 8.5% increase compared with 2023. This was thanks to positive returns on investments and a positive balance between contributions paid and benefits received, according to Covip.

Assets under management for the first-pillar ‘casse di previdenza’ reached €124.7bn last year, up from €114bn in 2023.

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