Pension funds, increased membership and returns. Under 35 19.9% of members

At the end of 2024, the resources accumulated by supplementary pension schemes stood at EUR 243.4 billion (+8.5% compared to the previous year). A result due, the report states, mainly to the positive dynamics of the financial markets. Accumulated resources amount to 11.1 per cent of GDP and 4 per cent of Italian households' financial assets.

Contributions collected during the year amounted to 20.5 billion, an increase of 7% over 2023, and were up in all the complementary pension forms: 7.1 billion were collected in negotiated funds (+9%); 3.3 billion were collected in open funds (+6.8%); 5.3 billion were collected in 'new' PIPs (+4.7%); 4.6 billion were collected in pre-existing funds (+7.4%). The number of members paying in in 2024, excluding the 'old' PIPs, is 7 million, 72.3% of the total. The contribution is EUR 2,890 and is higher for employees (EUR 2,990), who can also benefit from severance pay flows, than for the self-employed (EUR 2,720). Non-paying members number about 2.7 million and are more frequently found in market forms and among the self-employed. Covip also notes that in 2024 the outflows for pension management will amount to a total of 13.2 billion. Pension benefits were paid out in lump sum in the amount of 5.2 billion and in annuities in the amount of 361 million. Redemptions amounted to 2.1 billion and advances to 2.7 billion. Also in 2024, about 2.4 billion in advance temporary supplementary annuities (Rita) were paid out.

The Authority emphasises that returns, net of management costs and taxation, were positive for all types of sub-funds of supplementary pension schemes, with particularly favourable results for investment lines with a higher equity content. In fact, equity sub-funds achieved the highest performance, with average returns of 10.4% in negotiated and open-ended funds and 12.9% in PIPs. Balanced lines also achieved positive results, with average returns of 6.4% in negotiated funds, 6.6% in open-ended funds and 7% in Pip. Covip adds that more limited, but still positive, performances were recorded for bond lines. And it points out that over a ten-year observation period (from 2015 to the end of 2024), the average annual compound returns of the lines with a greater equity content are, for all types of pension forms, between 4.4 and 4.7%, being higher than the average return of the other investment lines and also higher than the rate of revaluation of the employee severance indemnity (equal to an average of 2.4% per year over the ten-year period). But equity lines continue to be chosen by a still minority share of members: 11.7% of the total.

The report highlights how pension funds' investments (excluding mathematical reserves with insurance companies and internal pension funds of institutions and companies) are mainly 'allocated', 55.5% of the total, in government bonds (14.2% are Italian government bonds) and other debt securities. Pension funds' investments in the Italian economy (government bonds, securities issued by Italian residents and real estate) amounted to 40.1 billion, or 19.3% of the total. Investments in debt and equity securities of domestic companies, amounting to €3 billion and €2 billion respectively, remain stable compared to 2023 (2.4% of assets), domestic investments held through Oicvm units stand at €2 billion. Covip points out that, despite the marked international diversification that characterises the investment policies of pension schemes, the sector is showing increasing attention to the employment opportunities offered by the country system.

Not missing from the report is a reference, as always, to the pension funds. In particular, it is stated that at the end of 2024, the total assets held by the pension funds amounted, at market values, to EUR 124.7 billion, compared to EUR 114 billion in the previous year: 'the positive performance of the financial markets, and in particular the equity markets, contributed above all to the change'.

From Covip also come some indications and possible options to foster the relaunch of complementary pensions. "First and foremost, it is important to provide for a broad and effective information campaign," said President Pepe. He added: "Mechanisms that make participation more automatic, such as silence-consent (currently operating only in the case of first-time employment) or automatic enrolment with the possibility of reconsideration, should also be viewed positively. In the Authority's view, however, the 'default' line, i.e. the one towards which silent subjects are directed, and which is currently a guaranteed line, should be reconsidered in favour of solutions that are more suited to the different needs and characteristics of each one. A more effective approach, again according to Covip, could be the adoption of a 'life cycle' model, which dynamically assigns the subscriber, time by time, to sub-funds with different risk profiles with the aim of optimising the risk-return ratio, taking into account the different phases of the life cycle. For the Authority, also 'interventions of a fiscal nature could represent an important lever to incentivise adhesion, especially for the less affluent groups of workers, more in need of protection in old age'. And a first measure could concern 'the possibility of transforming the deductibility of initial contributions into an entry bonus in the first years of membership'. An entry bonus at the birth of a child would, in Covip's opinion, constitute an incentive to enrol minors in forms of complementary social security, 'even more useful if the accumulated sums could also be used to support the course of study'.