Italy’s pension fund association Assofondipensione is seeking to block a reform introducing the portability of employers’ contributions, warning it could undermine schemes’ growing allocation to private markets and support for the domestic economy.
The legislation, approved by parliament in December, allows workers to transfer employers’ contributions to open pension funds (fondi aperti) and private pension plans (PIPs). It was due to take effect on 1 July but has been postponed to 31 October.
“By postponing the measure by four months, the Parliament has realised that it’s best to reconsider it. I hope they realise the damage it can cause, and the risk that the investment trend [in private markets] pursued by pension funds for years could be interrupted,” Assofondipensione president Giovanni Maggi told IPE.
Maggi said the delay was the result of lobbying by the association.
“Now we’ll see how to proceed and what we can achieve in the coming months. The goal is to block the law,” he stated.
According to Assofondipensione, the legislation would run counter to government policy aimed at encouraging pension funds to support Italy’s economy through domestic investment.
The association has promoted three funds of funds alongside partly state-owned investment bank Cassa Depositi e Prestiti (CDP) and asset manager Fondo Italiano d’Investimento, targeting private equity, private debt and infrastructure investments by industry-wide pension schemes (fondi negoziali).
Maggi warned that significant outflows linked to portability could disrupt long-term investment strategies, particularly for schemes with higher exposure to illiquid assets.
“Above all, there could be a sort of standby for those funds that had planned further investments in private markets and who, with this law, said, ‘Okay, let’s see what impact it will have and then decide what to do’,” he added.
Assofondipensione and its member schemes view the introduction of portability as “a serious mistake” that could damage the pension system over the medium to long term, as well as outcomes for members.
“Commercial networks of banks and insurance companies have tools at their disposal that we don’t [have[. Our concern is that there will be aggressive interventions that promise the moon and could also create problems for members in the long run,” Maggi noted.
He added that pension funds could respond if they face sustained competitive pressure from distribution networks.
“If members are systematically attacked by some commercial network, the (pension) funds can decide to take away their mandates; the funds will decide individually (but) if the (pension) funds are attacked by some aggressive network, they will defend themselves,” Maggi said.
