MILAN, Italy -- After eight months of waiting, the Fonchim pension fund has won regulatory approval to fund investment contracts.
The Commissione di Vigilanza sui Fondi Pensione, Rome, Italy's pension regulator, gave the Milan-based scheme for Italy's chemical and pharmaceutical industry workers permission Feb. 17 to start work.
Delays had been caused by a combination of staff shortages at COVIP and problems with the wording of the contract. Regulators paid special attention to avoid potential conflicts of interests, such as avoiding investment in stocks of contributing companies.
In July, the 250 billion lire ($142 million) Fonchim picked three European bond managers: Assicurazioni Generali, Trieste; Riunione Adriatica di Securta, Milan; and a joint venture between Citibank, London, and Unipol, a Bologna-based joint venture.
Joint ventures hired
Hired for balanced accounts were three joint ventures: Credito Italiano, Milan, and Rolo Banco, Bologna; Istituto Mobiliare Italiano SpA, Rome, and Unionvita, Rome; and Mediolanum, Milan, and State Street Global Advisors, London (Pensions & Investments, July 13).
While Fonchim is the furthest down the road, things are humming at the three other closed pension funds that are authorized to collect contributions. Another dozen are queued up for regulatory approval.
Milan-based Cometa, the scheme for the country's 1.2 million metalworkers, plans to seek bids for money managers at the end of March, with appointments slated for the end of July, said Maurizio Agazzi, director.
The types of mandates, however, have not yet been determined for the fund, which has 300 billion lire in annual cashflow. As of the end of 1998, the fund had 120 billion lire in assets. Andersen Consulting SpA, Milan, has been appointed as administrator and the Milan branch of Monte dei Paschi di Siena as named custodian. No decision has been made whether to use outside consultants.
Meanwhile, Turin-based Fondo Quadri e Capi FIAT, a new pension fund for the automaker's blue-collar workers, recently issued a tender for a global balanced manager and a short-term bond manager to split evenly its 23 billion lire pension fund. The final selection of managers will be made April 12. No consultant is being used.
But life in Italy rarely goes smoothly. Fondenergia, the Rome-based scheme for energy workers, has delayed plans by two months until April to seek its first money managers. The reason for the delay? The office relocated.
Fund officials also expect a surge in membership this year. "We hope to have 30,000 members by the end of 1999. We expect a boom in applications after we send out the first-year statement of account at the end of February," said Elio Giannetti, vice-president.
While these funds are fairly advanced, another 12 are signing up members. When they achieve the minimum memberships set by the regulatory body, they will be able to appoint boards of directors. From there, the funds will select custodian banks and administrators, then money managers.
Regulatory delays hamper some of these funds, such as Fondodentisti, the Rome-based dentists' fund. "Unfortunately, we were unable to get COVIP approval to start collecting funds before the end of 1998. This means we lost out on one year's tax concessions for our members," said Luigi Daleffe, fund president.
Fondodentisti officials are close to naming a custodian bank and administrator.
Other funds are struggling to meet the minimum participation levels set by the regulator.
Previdoc, the Rome-based fund for the country's 40,000 accountants and business brokers has between 500 and 600 members signed up, out of the 2,500 minimum set by COVIP.
"We are a bit behind our forecast but that is because we, as a profession, have been distracted slightly from the question by issues regarding our professional role," said Roberto Bozzo, the pension fund president.
Need 20,000 people
Fon.te must collect at least 20,000 members from a potential pool of 4 million sales, tourism and service workers in Italy. "The businesses in this field range from the supermarket chains; through catering concerns such as McDonalds; multinationals like Sony and Canon, Renault, and Peugeot, that employ thousands of people; through to the traditional Italian mom-and-pop store with one or at most two employees," said Alessandro Vecchietti, a member of the fund's provisional board of directors.
Meanwhile, new funds keep sprouting up. These include Socrate, a Milan-based fund for the 15,000 workers employed by road haulage companies belonging to the Assologistica trade association. Others include Rome-based Previvolo for pilots and technicians working for Alitalia and its sister companies; Previambiente, for workers in the waste management sector; Rome-based Fondapi, for small- and medium-sized businesses; and Fonser, for insurance services industry employees.
Another scheme getting started is Fopen "but we are going to have to find a snappier name," said Stefano Pighini of the ENEL national electricity utility. Designed for the 80,000 non-management employees of the huge corporation, the scheme is expected to pull in 150 billion to 160 billion lire per year, based on a 50% participation rate. "We do not expect to be appointing asset managers for at least six months," he said.
Genoa-based Fonligure, Italy's first regionally based fund, has just received regulatory go-ahead to recruit participants. It is designed to cover the region's 53,000 self-employed artisans and small-business workers.
Appointments next year
"We have been set an initial target of 2,000 members and we hope to achieve this by October," said Luca Costi, a member of the preliminary board of directors and secretary of the Liguria branch of Confartigianato, the Italian confederation of crafts and small businesses. "This means we will probably be appointing our administrators, custodian bank and then our asset managers in 2000. We are being conservative, but we estimate we should get about 6,000 members by the fourth year, which would mean we have 60 billion lire to invest."
The regional fund, he said, is operational while national counterparts are not, and the local fund is better tailored to local needs, and is less costly than alternatives.
The fund is distributed by two local banks, and is being advised by Intesa Asset Management and Eptafund, both Milan-based.