Room for investments in the real economy by Italian pension funds “remains large” under the current regulatory framework, said Francesca Balzani, acting president of the Italian pension regulator COVIP.

Complementary pension schemes’ investment in the real economy in Italy totalled €36.6bn last year, or 19.4% of total assets, compared with 20.8% in 2022, she said, introducing the regulator’s annual report in a press conference today.

She added that, however, there is increasing interest by Italian schemes to invest in the country’s real economy, as pension funds expand their investment strategies through partnerships.

First pillar pension schemes (Casse di Previdenza) invest €44bn, equivalent to 38.5% of total assets, in the Italian economy – a value that is up 3% year-on-year, mostly in real estate (€17bn), and government bonds (€18.3bn), up over 3 percentage points compared with 2022, according to COVIP.

The schemes have boosted investment in corporate bonds and equities to €8.4bn, or 7.3% of total assets, against 6.5% ofin 2022, it added.

Italian complementary pension schemes continue to allocate the portion of their assets (56%) to government bonds and other debt securities, around 14% to Italian public debt securities, 21.4% to equities, 15.8% to Undertakings for the Collective Investment in Transferable Securities (UCITS), and 1.8% to real estate, mainly in pre-existing funds, according to the regulator.

Returns ended in positive territory for all forms of pension schemes in 2023, with equity sub-funds returning on average 10.2% in industry-wide pension funds, 11.3% in open pension funds, and 11.5% in individual pension plans (PIPs), it added.

Equity sub-funds returned between 4.2% and 5% over a 10-year period for all forms of complementary pensions. Mixed bond sub-funds returned 7.2% in industry-wide schemes last year, and 4.4% in open pension funds.

Assets under management of supplementary forms of pension totalled €224.4bn in 2023, equivalent to 10.8% of Italy’s GDP — a “significant increase” of 9.1% compared with 2022, as a result of positive returns, and a positive ratio between contributions and payouts, Balzani said.

First pillar pension schemes held €114bn in total assets at the end of 2023, up from €103bn at the end of 2022.

The schemes invests €43.1bn in debt securities, up 1.7% year-on-year, €21.7bn in equities, up 1.5% on an annual basis, and €18.8bn in real estate, according to COVIP.

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