Much of the future of Italy’s new complementary DC plans lies in the hands of the Commissione Vigilanza sui Fondi Pensione (Covip), which was set up to regulate them.
Covip has been severely criticised by pension funds for what they see as the excessive bureaucracy of the approval process. It takes 90 days to gain approval to approve or change a manager or investment strategy. Any changes – such as the change from monocomparto to multicomparto investment choice – require a change to the articles of the individual pension scheme.
However, Covip counters that it is merely following the letter of the pensions law, and has itself urged government to relax some of the approval procedures. Bruno Mangiatordi, one of Covip’s two commissioners, says: “I recognise that that there is a lot of bureaucratic delay and this is undesirable. Much of the authorisation process is required by law. The law requires us to go through theses procedures although we now believe it is too large. We are overwhelmed with paper. That is why we have asked the government to make some significant change to the law on authorisation.”
Mangiatordi says Covip now wishes to change its role from a reactive to a proactive body, with a ‘hands off’ approach to regulation.
“It was inevitable that there would be detailed approval process in the beginning because the system was entirely new. That was the first stage. Now we are at the second stage, and we think it is time to change the a priori approach and get Covip more involved in the ex-post analysis of how funds are performing and ex-post control of how they are behaving.”
In this respect Mangiatordi says that they are watching what is happening to pensions regulation in the UK closely: “We are particularly interested in Pickering’s proposals for a new Opra, to have a body that is able to identify the moment when things are going wrong rather than simply react when they have gone wrong.”
One sign of this transformation of Covip’s role is a law now before parliament which removes the a priori powers of Covip regulate the tender process and approve the contracts of the closed DC plans.
The change from monocomparto to multicomparto is also bringing new challenges. Pension fund fears that Covip will use Fonchim’s scheme, which was approved in August, as a template for all pension plans are groundless, says Mangiatordi. “We simply do not have the power to impose a model.”
However, Covip will take a hard look at the way multicomparto schemes are organised. “Pension funds will need to know where every euro goes, and how costs will be allocated between the different compartments. We will have to see that the organisation of such funds is reinforced.”
Covip will also be monitoring the way in which pension fund members make their investment choices. “This the delicate stage of multicomparto – when and where you choose to move. There is a risk of the bandwagon effect as people copy each other, shifting from fund to fund as people do in the financial market. That is our main concern. The problem is a new one, and we don’t yet know how it will be resolved.”
Mangiatordi says the protection of pension fund members is Covip’s priority. “The defined contribution scheme covers everybody, and everybody is encouraged to put their money into a DC fund. No other choice is possible. This means that there are some quite poor people are contributing. We do have a moral responsibility to see that these people do not take unnecessary risks.
“Even though we have a DC scheme rather than DB this doesn’t mean that we don’t care. It still means that the funds have an obligation to make sure that a member will get the pension they have been promised.”

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