After getting off to a brisk start, Italy's private pension funds are languishing. While 31 industrywide funds have been established, only five of them have appointed money managers.
The two most recent appointments came from Fondodentisti, the 10 billion lire ($5 million) fund for Italy's 45,000 dentists and Fondenergia, the 140 billion lire fund for the country's 45,000 energy workers. Both funds are based in Rome.
Fondodentisti, which has 3,000 members, in December tapped INVESCO Italy and Cisalpina Gestione, both based in Milan, said Luigi Daleffe, the fund president.
The asset allocation is yet to be worked out.
"Members were asked to specify whether they preferred their fund to be biased toward bonds, a balanced account, or stocks. We will respect their decision," Mr. Daleffe said.
Fondenergia picked Europlus CreitRolo SGR SpA, IMI Fideuram Asset Management SIM, and Mediolanum State Street SIM SA, all based in Milan. Two-thirds of the assets will be invested in bonds and one-third in stocks.
That leaves 26 funds that are still signing up members. COVIP, the Rome-basedregulatory body, assigns each fund a minimum number of members it must sign up before it appoints a board of directors and begins hiring managers.
The latest to join the list is Solidarieta' Veneto, which is based in Venice and is designed to provide private pensions for workers -- whatever their field -- in the Veneto region of Northwest Italy.
The fund is regional rather than based on who employs the participants, said Franco Deotti, fund administrator, because "unlike the rest of Italy, the Veneto has low unemployment."
"Indeed, in some areas jobs go begging. Employers are competing with each other to get qualified labor and people change jobs frequently," he said. "They switch from one industry to another but stay in this part of the country. Thus a regional, as opposed to an industry-based, fund has more appeal here."
Solidarieta' Veneto is not in fact starting from scratch. It originally was set up 10 years ago. It has 10,000 members and 30 billion lire administered by an insurance company.
"It is too soon to say when we will achieve our minimum quota and therefore when we will be looking for fund managers," said Mr. Deotti who, with his staff, is sending out mailings to the 350,000 potential members.
Now that its minimum number of participants has been reduced, another fund is on the verge of seeking a manager. Established at the end of February with the task of signing up 2,000 members from a potential pool of 53,000 self-employed crafts-category workers in the Liguria region, Genoa-based Fonligure has been granted an amendment of its minimum to 1,000, roughly 300 fewer people than have signed up.
"The first people to sign up are getting testy. They want the scheme to get going. We could not start collecting funds until we achieved a quorum," said Luca Costi, a member of the preliminary board of directors and secretary of the Liguria branch of Confartigianato, the Italian confederation of crafts businesses and small businesses. "Now we plan to elect the board of directors at the end of March. The tender for the fund manager will go out soon thereafter."
The fund likely will seek only one manager, he said.
Previdoc, the fund for the country's 40,000 "dottori commercialisti," a cross between accountants and business brokers, which was shooting for a 2,500-member minimum, found itself in a similar position.
"We asked for, and obtained, a reduction to 1,000 and now have 1,300 members," said Roberto Bozzo, the fund president.
The fund's board of directors should be in place by April. It will first appoint administrators and a depository bank, and then search for a money manager. Mr. Bozzo could not provide an estimate for the amount of money to be placed under management, but, he said, "We expect to appoint one fund manager."
Previdoc is exploring the possibility of joining forces in a number of areas with Fondodentisti and Previclav, the fund for consultants who advise companies on employment law, which is complex, and handle preparation of paychecks.
One year after setting out to sign up 20,000 members from Italy's 4 million sales, tourism and service workers, the Rome-based Fon.te fund still has not reached its target. Maria Antonietta Di Vito, spokeswoman of the Fon.te administration office, who was unable to provide up-to-date figures for membership, said, "the Italian scene is still a mom-and-pop shop affair. Getting our information to all these people is quite difficult. We are heartened though by the fact that the majority of those who have signed up have opted to pay in the maximum. This shows that our members believe in the scheme."
That is more than can be said about the country as a whole, said Claudio Pinna of the Rome office of Adelaide Consulting.
"The take-up rate of the industrywide funds is just about 50% across the board. For something that was supposed to be tailor-designed to the workers' needs, these funds seem less than ideal," he said.
Figures show only a minority of fund members are in the younger age range. In the case of Cometa, which has 300,000 members, 44% are at least 43 years old. "Younger people are needed to contribute long-term to these funds. But they do not see the point of private pension provision and they do not have the money to spare to pay into a fund," Mr. Pinna said.
Suggestions abound as to what should be done. The government needs to run a program to make people take individual responsibility for pension provision. More dramatically, the state pension system needs to be reformed if Italy is not to find itself, in just two years time, with 21 million workers servicing 18 million pensioners. This would reduce the burden on workers and allow them to pay for their own pensions.
"The suggestion from one of the labor union federations that, in place of making private pension funds more palatable, they merely be made compulsory has not been unanimously welcomed," Mr. Pinna said.