ITALY - Less than 30% of Italian private sector workers are now signed up as members of private pension schemes but the number has at least climbed to 3.5 million people, data from Italian pension sector regulator Covip reveals.
Figures also indicate the number of people with a private pension plan climbs to 4.7 million Italian workers is if self-employed people are included- a 43% increase compared with 2006.
Covip released data last week showing the number of workers joining private pension schemes since January 2007 - the moment TFR reforms were enacted and workers were given the option of putting a percentage of their severance pay into private pension funds or holding it with the company.
As a result of these reforms, approximately €3.2bn has flown into private pension funds.
That said, the 3.5m figure relating to private sector employees is disappointing given the potential pool of employees is of 12.2m and Covip's data showed the growth in private pension schemes' members slowed markedly in the first four months of this year.
To the end of April, the increase in new members was of less than 1% compared to the end of last year. This relates to a mere 130,000 new members, 80% of which are private sector employees.
Covip admitted slowdown was a worry for the sector and suggested "the drive of the reform seems to have run out of steam".
The watchdog said the government reform had achieved significant results, however there is a lot of work to be done to encourage younger as well as self-employed people to join.
Covip believes the two main areas of intervention needed to increase the number of people joining private schemes are changes to tax and the TFR rules.
The regulator suggests the tax charge on gains from workers' pension fund returns, which currently stands at 11%, should be cut.
More specifically, Covip hopes a system of deductions on tax paid could be implemented for young people in particular.
However, the welfare minister Maurizio Sacconi has said lowering the tax rate is "not a priority".
Another tax-related measure which would increase the robustness of the system, according to Covip, would be to allocate 0.5% of income tax towards the private pension sector.
Current TFR rules mean once workers decide to pour a percentage of their TFR (severance) money into a private pension scheme, they cannot change the sum until the end of their career.
Covip argues dissuades people from joining a private pension scheme so the body believes workers should be able to switch back to the old pensions system during their career in some cases.
The regulator also said the turbulent activity in the financial markets earlier this year have contributed to the limited increase in members.
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