The law decree 5 December 2005 n.252, in application of the last pension reform (law 23 August 2004 n.243), has significantly modified the current law on pension funds (law decree 21 April 1993, n.124). The new law is likely to pave the way for major change in Italian pensions, moving from a small niche for selected players to an open market with freedom of choices.
The main factors of this major change are:
q The mechanism of the Silenzio-Assenso (silence-approval) which will transfer the employee statutory severance pay - the Trattamento di Fine Rapporto (TFR) - into the pension fund unless the employee refuses;
q The opportunity for the various players (banks, registered asset managers - the SGRs - and insurance companies) to offer their products and services into an open market;
q The freedom of choice given to Italian workers to participate in the various group or individual pension schemes, with the possibility of moving freely from one fund to another. Therefore, it can certainly be said that this law has liberalised the Italian private pension market. This liberalisation has introduced several specific duties, such as:
q Employers must inform their employees as to the nature of the Silenzio-Assenso concerning their TFR and the consequences of their choice (ie, leaving the TFR in the company book reserves, choosing the national category pension fund or an open pension fund, or an individual insurance product, and so on);
q The various pension funds (closed, open, based on insurance contracts…) should provide potential members with very detailed information and individual simulations in order to help their choice;
q Asset managers who wish to manage the TFR contributions must offer an investment line with guaranteed return and limited cost, in order to minimise the risk for the fund members.
The new legislation only come into force on 1 January 2008.

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