ITALY – Companies with up to 50 employees could be the main target of a new compensation fund to be set up to aid employers investing severance payments into pension funds, says welfare minister Roberto Maroni.

Media reports have quoted Maroni as saying that only small businesses would receive help from the fund, which the government is expected to set up in co-operation with the association of Italian Banks, ABI.

His comments were made at a meeting with the budget and work committees of the lower chamber of parliament yesterday.

The new fund, called Public Guarantee Fund, which ABI approved in May, has been set up in response to requests from employers’ association Confindustria, which is lobbying on behalf of small and medium-size enterprises.

Confindustria argues that the pension reform could bring cause financial difficulties for some employers, who have so far used employees’ severance payments as a reserve. Following the implementation of the pensions reform 2004, they will have to pay them into pension funds instead.

The minister was quoted by press reports as saying that the government would be prepared to cover 100% of severance payment losses.

Confindustria, which is scheduled to meet Maroni next month with other social partners, declined to comment on the suggestions.

Meanwhile, consultant Watson Wyatt has called for Italian employers to address the new laws affecting supplementary retirement schemes “in order to avoid unnecessary cost and administration”.

"This is a great opportunity for employers and employees, but to take full advantage of the new provisions employers need to prepare the ground now, including providing an employee information and financial education campaign," said senior consultant Livio Mocenigo.

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