Pensions: why the Italian savings sector should look to private equity
Italia is facing a demographic and economic transformation that makes it increasingly important to rethink the relationship between saving, investment and pensions. In this context, it is essential to explore investment solutions capable of reconciling individual pension objectives with the financing and development needs of the Italian economy.
In an ageing country, where people are living longer and the sustainability of the pension system is a structural challenge, preparing for retirement means not only saving more, but also choosing carefully how to invest one’s assets over the long term. In this context, private equity can offer private investors an opportunity for diversification whilst, at the same time, helping to finance the real economy.
The question is: are we making use of all the tools available to us to build up sufficient wealth to meet our future needs?
In the United States and Canada, large pension fund investors allocate significant resources to private markets. For these investors, private equity is a component of strategies aimed at diversification and the creation of value over time. Historical data also helps to explain the interest in this asset class. Over a twenty-year horizon, private equity has delivered an average annual net IRR of 13.1 per cent, compared with 7.9 per cent for the MSCI World NR, a difference of over five percentage points that rewards the selection of managers and the value-creation discipline characteristic of this asset class. It is important to emphasise, however, that these investments are illiquid: capital remains tied up for several years, often between 5 and 10.
The principle underpinning these strategies is to invest in unlisted companies, supporting them as they grow, innovate and expand internationally – a process that inevitably takes time. This approach can generate returns for investors and support the development of these companies.
