Fondo Pensione Cometa, the €14bn Italian pension fund for the metal industry, is proposing to set up a public-private fund of funds (FoF) for alternative, direct investments in Italy, with a protection mechanism against losses for pension schemes allocating their capital.
The FoF would collect capital from pension schemes, with a long-term commitment, for direct investments in infrastructure and small and medium-sized firms via private equity, private debt, and venture capital investments, Cometa’s president Riccardo Realfonzo said before the Italian parliamentary committee investigating pension funds’ investment policies.
The goal is to support industries that are the backbone of Italy’s economy, the growth of companies, cooperatives of workers, and social infrastructures.
Cassa Depositi e Prestiti (CDP), the partly state-owned investment bank, would be responsible for issuing the shares in the FoF, protecting the investments against potential losses.
CDP would protect pension funds against losses either by setting up a public fund guaranteeing a certain level of returns, equal to the revaluation of the severance pay (Trattamento di Fine Rapporto), or acting as a co-investor with public capital, as in the case with the Real Economy Project, according to Cometa.
The investment protection means also that, at the time of maturity, pension funds would receive the full value of investments made.
Cometa is ready to pilot a project with CDP to channel capital to support the real economy, it said.
According to figures published by pension regulator Covip, only 20.9% of the total assets managed by pension schemes in Italy, amounting to €222.6bn, are invested in Italy, and only 5.5% are channelled to support the Italian economy, while 79.1% are invested abroad, Realfonzo said.
Industry-wide pension schemes (Fondi Negoziali), with total assets of around €67.9bn, invest 10.5% in Italian public debt securities while investments in the Italian economy are marginal, with only 2.5% of assets invested in bonds and equities issued by Italian companies – 1.5% in bonds and 1% in equities, Realfonzo said.
A very small part, just 0.3% of total assets, is invested through infrastructure, private debt and private equity funds, social impact funds and social housing funds, he said, adding that numbers show that pension funds are underinvested in general in the country’s economy.
“We [in Italy] have a poorly developed stock market, a productive industry essentially made up of small businesses, and poor development of direct investment instruments such as private equity, private debt and infrastructure funds,” Realfonzo said.
Supplementary pension funds could be an extraordinary driving force for Italy’s economic growth, he added.
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