Italian pension funds are demanding tax concessions as a bargaining chip to invest in the real economy, reminding the government of the substantial investments already made.
Pension funds association Assofondipensione is asking the government to increase the 10% limit to benefit from tax exemptions on returns when investing in Italian companies, and for all types of investments, not just equities, president Giovanni Maggi said in an interview.
According to Maggi, it is necessary to simplify legislation to effectively enforce and reap the benefits of tax exemptions.
Pension funds’ demands on this have been brought to the negotiating table following actions taken by the government to channel institutional capital to support small and medium-sized firms.
The schemes are also reminding the government of efforts already made to support productive industries and the domestic economy.
Assofondipensione is involved in three funds of funds (FoFs) for private equity, private debt and infrastructure investments under the Real Economy Project (Progetto Economia Reale) in partnership with state-owned investment bank Cassa Depositi e Prestiti (CDP).
Pension funds Arco and Concreto have invested in the infrastructure FoF that has conducted four investments worth more than €130m, Maggi said.
Fondo Arco is ready to invest €50m in a FoF set up with the European Investment Fund (EIF) targeting €500-600m from approximately 15 pension funds, and with 30% of the funds that will be invested in private markets in Italy.
The pension fund for the chemical sector, Fonchim, has mandated Neuberger Berman to invest €115m in private equity and infrastructure, and Italy’s largest pension scheme Cometa is working with CDP on a guarantee to invest €400m in the real economy, according to reports.
Enasarco already invests 50% of its alternatives portfolio worth €690m (which was worth around 13.2% of its total assets at the end of 2023) in Italy, it said in a document handed over to the parliamentary committee investigating schemes’ investments.
Last week, undersecretary of state of Italy’s Ministry of Economy and Finance (MEF) introduced a FoF for small-cap equity listed on the Italian stock exchange to first pillar pension schemes.
The latest FoF might open a further front of negotiations between the government and first pillar pension schemes demanding to get rid of the double taxation on investments and pension payouts, while lamenting the high tax levy of 26% on financial returns.
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