ITALY - The €191m pension fund for Italian utility workers is one of the first to choose a manager for a yet unknown amount in TFR severance payments that will enter the fund from July.

Eurizon Capital, a fully-owned subsidiary of Milan-based Intesa Sanpolo insurance, won the mandate.

The asset manager said in a press release it had also been awarded a TFR mandate with Previmoda, the €133m Italian fashion and textiles industry pension fund with just over 40,000 members.

All Italian pension funds, which expect to receive some of the €5bn in TFR payments forecasted to go into the country's second pillar system, had to set up guaranteed return portfolios as the severance pay by-law has a 3.1% minimum annual guarantee return. Managers for these portfolios have to be appointed before July.

A spokeswoman for the 22,534 member Pegaso fund had told IPE last December her fund is expecting around €50m to flow into the fund.

Under the so-called "silent consent system", TFR money paid by companies with over 50 employees will be transferred into pension funds, unless employees specifically choose for their money not to go into the second pillar. In that case, it will go into the INPS social security state fund but TFR money accrued until 2007 will remain with the companies.

Eurizon Capital, until November known as Sanpaolo IMI Asset Management, noted it was also chosen by the 25,579 member Fonte fund for workers in the tourist industry and by 9,500-member Foncer for ceramic workers for TFR-related mandates.

Eurizon Capital is part of the Eurizon Group, which also has an asset management arm in Luxembourg.

The group saw its net profit rise to €151m at the end of March, an 8% rise year-on-year while total assets under management were €193.7bn.