ITALY - Increased transparency is vital to Italy's pension system according to the association for the development of the Italian pension funds market, Mefop.
Mefop president Mauro Marè, speaking at the association’s recent conference on the first and second pillars and the Trattamento di Fine Rapporto (TFR) reform, said Italy’s demographic and economic scenarios warranted increased investment in transparency and greater dissemination of public information.
The mission for the next 18 months would be to “invest in information” which could involve mass media campaigns, he told delegates.
According to Cristina Guerini, responsible for pension funds at Sanpaolo Asset Management, problematic issues highlighted by Marè included the facts Italy has the lowest fertility rate, the highest life expectancy, the highest reduction rate of working age population, the highest dependency ratio (from 28% to 62% in 2050) and a low benefit ratio and replacement rate.
Another theme from the day was the call for more certainty rather than more reforms, said Guerini, who attended as a delegate.
Much of the discussion lent towards the recent reform of Italy’s TFR system. This reform set out to stimulate the DC sector by encouraging workers to transfer a termination indemnity payment historically made by their company into a TFR fund held on their behalf to either a privately managed open-ended pension fund, or an industry wide “closed end” pension fund.
The reform gives employees six months from 1 January 2008 to opt out of the transfer. Without written opposition, the TFR funds will transfer automatically to a pension fund by default, a process known as silenzio assenso.
Delegates were told this process could be improved by updating the compensation system for the firms, because the TFR currently represents a form of funding for the firms, and by an extension of the pension schemes to atypical employees and public employees.
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