ITALY – Fonchim, Italy's industry-wide chemical and pharmaceutical industry pension fund, is acquiring the Bayer Italia pension fund (Fpbi), the Italian unit of the German chemical firm Bayer.

Fonchim will incorporate Bayer Italia’s 2,000 pension fund members and €50m pension fund assets in a deal which will take effect on 1 January 2006.

The first of Italy’s new contractual occupational pension funds, Fonchim has built up a membership of 116,000 – 60% of its potential membership – and assets of €1.2bn, since it was launched in 1999.

The merger of the two funds is seen as an endorsement of Italy’s complementary pension system, which has been slow to reach a critical mass of assets.

Mergers are seen as one way of increasing the asset base. However, to date, there have been few mergers of any significance. The proposed merger between the contractual funds Previcooper and Cooperlavoro foundered because of opposition from trade unions.

Fpbi president Luigi Roveda said in a statement that the Fonchim-Fpbi merger was a vote of confidence by chemical workers in Italy’s industry-wide contractual pension funds. He said it “represents the first important example of organisational rationalisation of the complementary social security system in our country”.

Both pension funds have similar investment strategies, offering pension fund members three lines of investment – growth, stability and cash where allocations to equities, bonds and cash are designed to provide different levels of risk and return.

The pooling of resources will lead to a reduction in management costs, Roveda said, and was an important reason for the merger.

Fpbi currently uses three asset managers, all of them Italian: SanPaolo IMI, Banca Popolare di Milano and Unipol. Fonchim terminated a mandate with Unipol in October last year.

Fonchim uses a mixture of domestic and international asset managers - Rothschild, Pioneer, SanPaolo IMI, Credit Agricole, Duemme and Franklin Templeton.

Meanwhile, a survey commissioned by Fonchim from the Pension Forum at Milan’s Bocconi University, has endorsed the popularity of Fonchim with its members. A majority, 85%, said they were satisfied with the scheme, while only 4% expressed dissatisfaction.

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