Mefop economics and finance area senior researcher, Antonello Motroni, discusses Italy’s pension coverage challenge, pension investments and EU regulation

At the end of 2024, membership in supplementary pension schemes exceeded 11 million, with the majority (56 per cent) enrolled in personal pension schemes. In 2024, membership grew by an average of 4.2 per cent compared to 2023, in line with past years.

However, despite this steady growth, the majority of eligible workers are not enrolled yet, keeping the overall participation rate below 40 per cent. As a consequence, the main challenge is to increase membership. This is a crucial issue given that the population is projected to become one of the oldest in the world and public pensions will increasingly rely on contributions. Changes in the labour market and technological innovations (AI and digitalisation) pose additional challenges.

To address low membership, a new institutional communication strategy is needed, leveraging all media, particularly social networks, to raise awareness about the importance of joining a pension fund. The establishment of a pension tracking system could also play a key role to fix pension gaps.

The public debate is also focused on the relaunch of automatic enrolment via ‘silent consent’ regarding the severance payment Trattamento di Fine Rapporto (TFR). During the discussion of the 2025 budget law, a new term for tacit approval for employees not enrolled was proposed, but not approved.

In this context, it is worthwhile to recall that social partners have introduced automatic enrolment to sectoral pension funds in some collective bargainings, supported by a small contribution from the employer, to boost participation in occupational pensions. This measure has led to a rapid increase in membership in certain sectors.

However, data released by Commissione di Vigilanza sui Fondi Pensione (Covip) highlights a significant potential pension gap for those automatically enrolled through collective bargaining; they need to switch to a full membership, unlocking all sources of contribution to secure an adequate benefit. The government has set up a working group to draft a reform of the pension system, encompassing all pillars, but no legislation has yet been unveiled.

In addition, pension funds are under pressure to support the Italian economy. While 39 per cent of assets are invested in government bonds (14 per cent in Italian bonds), appetite for private assets is growing: A Mefop survey showed that in 2023, 60 per cent of pension funds invested in real assets, up from 47 per cent in 2020, with a focus on private equity and private debt, but in absolute terms, investments remain limited.

EU legislation represented a big spur to sustainable investments and institutions have put in huge efforts: A Mefop study found that around €40 billion is allocated to ‘Article 8’ investments. However, the upcoming revision of the Sustainable Finance Disclosure Regulation (SFDR) has sparked a huge backlash, leading some pension schemes to pause further steps forward. Stewardship initiatives promoted by the occupational pension association are also ongoing.

Meanwhile, pension schemes are coping with the incomplete Digital Operational Resilience Act (DORA), which seems disproportionate to the operations and small size of the institutions. Looking forward, the Financial Data Access (FIDA) regulation risks becoming another thorny piece of legislation. Overall, the horizontal regulatory approach taken by Brussels concerns institutions due to complexities and costs, which are ultimately borne by members. The market hopes that the European Commission’s projects to streamline regulations and reduce red tape will adequately address the sectoral specificities.

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