If the educational (and financial) value of the Newborns’ Fund is in danger of going up in smoke

The 2027 Budget just outlined by the Council of Ministers provides for a pension savings account for every newborn, opened with the INPS, with a public contribution of 100 euros per year until the age of 18. The aim of the measure is to encourage young people to build up a supplementary pension from the earliest years of their lives, given that the state pension is set to decline inexorably once the contribution-based system is fully implemented from 2035. However, the legislation (Article 58 of the Budget Law) sets out only the general framework: the specific procedures for opening, contributing to, managing and using these accounts will then need to be clarified through implementing measures (a decree from the Ministry of Labour) or during the parliamentary process.

Whilst for individuals the sum is likely to be largely symbolic, overall the resources to be managed will be substantial and are already proving attractive to various players in the financial sector. And rather than addressing the crux of the matter – namely, whether a public contribution of 100 euros a year is truly capable of providing meaningful pension protection – the debate immediately centred on how the new scheme should be governed: will control remain entirely in the hands of INPS? Will the funds be invested, and if so, how? But above all, who will be entrusted with the financial management of the fund? Will it be solely the CDP, as provided for in the text of the Budget Law, or will banks and insurance companies also manage to get a slice of the pie?

These are understandable questions, because costs, returns, transparency and, above all, the trust of households depend on the financial architecture of the new pension scheme. The system cannot afford to betray that trust. Otherwise, the entire educational value of the government’s initiative would literally go up in smoke.

In addition to the meagre state contribution – for which, moreover, funding has been allocated for the first year only – it would also be worth considering the ‘possibility of withdrawing the accumulated sum upon reaching the age of majority in order to enrol at university or set up a business’, as announced by Prime Minister Meloni at the press conference presenting the Budget. This does not foster a culture of saving for the future.

The specific conditions for redemption will have to be set out in the implementing decree. There is therefore still time to reconsider. This is also because, even assuming a net annual return of 4 per cent, the total amount after 18 years would be 2,667 euros in nominal terms. This sum might be enough to enrol in the first year of university, but it is rather limited for setting up a business. If kept until retirement (at the age of 67), the total amount (again, in nominal terms) would reach €33,400, to be added to the state pension, net of any additional contributions that family members and the children themselves may make as they grow up.