ITALY - A reform of the Italian pension system including auto-enrolment into a mandatory defined contribution fund should be considered in the near future to push Italians to save more for retirement, industry figures said.
Speaking to GP on the sidelines of the conference Salone della Gestione del Risparmio held in Milan, Bruno Mangiatordi, commissioner of Italian pension watchdog Covip, said any mandatory element had been so far excluded by second pillar pensions regulation allowing individuals to choose whether to have supplementary pension provisions or not.
But, he said: "I would not exclude current arrangements might be revisited in the future. On this line, I think it could be positive to explore auto-enrolment into a defined contribution scheme. If an opt-out clause were included then the principle of individual choice would be safeguarded, but at the same time we would see people saving more."
PensPlan managing director Michael Atzwanger went even further. He said: "An auto-enrolment system could be the best way to incentivise participation into second pillar pension funds in Italy, as it has been done and it is being done in other countries. This will help greatly to tackle the problem of people not saving enough for retirement."
Data from Covip show the members of second pillar plans are around 5 million people, which represent only 20% of the eligible population.
ING Investment Management head of Italy Fabrizio Meo said in terms of financial education Italy lags behind other countries and Italian pension funds should ask themselves how they could encourage membership.
He added: "I think the government should make more efforts to get more people to adhere to second pillar pensions. The reduction of first pillar coverage will become a very hot topic in the future. Right now people are still retiring with good pensions."
Meo also said investment restrictions for Italian pension funds should be reviewed. Current provisions exclude several asset classes, such as commodities and private equity, from Italian schemes' investment horizon. "There is an underlying wrong assumption in the regulation which bans pension funds from investments in asset classes which do not have daily liquidity," he said.
He added the parliamentary commission on labour is currently talking to stakeholders to define a reform on pension funds' investments. He said ING suggested allowing pension funds to invest in emerging markets.
PensPlan's Atzwanger told GP: "Investment restrictions could be lifted in Italy. However, the most important thing is that Italian schemes equip themselves with the necessary tools and skills to carry out a proper oversight of the investments they make. Right now I am not convinced they all are at that stage."
