Inarcassa, the Italian first pillar pension fund for engineers and architects, expects a budget surplus of €1.2bn in 2025, according to the financial outlook approved by the scheme, as it has embarked on a journey to implement a new strategic asset allocation for 2024-2029, boosting alternatives in its investment portfolio.

The budget surplus is the result of income from members’ contributions and expenses for pensions paid, returns on invested assets, and operational costs.

Next year, Inarcassa expects contributions totalling over €1.8bn, up from €1.68bn in 2024. The scheme expects a budget surplus of €953.82m in 2024, according to this year’s financial outlook. It has not yet published its finalised financial statement for 2024.

The positive outlook for 2025 is the result of effective financial management and of pension savings increasing as the construction sector continues to recover, Inarcassa said in a statement.

One of the key elements defining the pension fund’s outlook for 2025 is its new strategic asset allocation aiming to achieve higher returns, it added.

The Rome-based scheme decided to review its strategic asset allocation to boost investments in alternatives and has also decided to increase its exposure to equities, while reducing its bonds allocation.

In 2025, Inarcassa plans to hold 3% of total assets in cash, and allocate 33.5% to bonds and Bank of Italy stocks, in addition to a 26% allocation to equities. it also plans to allocate 21% of assets to real economy investments and 16.5% to real estate.

The choice to invest in Italian equities and the real economy contributes to the growth of the domestic economy through the construction of infrastructure, it said. 

“We are called to invest in Italy, but we are penalised by taxation on returns that is at 26% – further subject to subsequent taxation – which takes away resources to be allocated to improving benefits for members,” Inarcassa president Giovanni Santoro said.

At the end of September, Inarcassa’s assets under management stood at €15.2bn, compared with €13.2bn last year. Gross returns of the first nine months of 2024 amount to 5.94%.

The scheme expects the number of members at the end of 2024 to reach 174,500 (-0.5% year-on-year), falling to 173,800 at the end of 2025 (-0.4%). The number of retirees will exceed 18,000, from 17,654 in 2023, in line with actuarial forecasts, it added. 

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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