WORRY, despair, sadness or uncertainty. These are the prevailing feelings among Italian workers when they think about the pensions that await them in old age, as soon as they retire. This is revealed by research commissioned by the investment platform Trade Republic and carried out by two professors from La Sapienza University in Rome: Michele Raitano, director of the Department of Economics and Law at the Roman university, and Marco Di Pietro, associate professor of Economic Policy. The study is based on a survey conducted by Bva Doxa on 2,000 of our fellow citizens: when asked how they feel about their financial situation after retirement, 74% of those interviewed said they felt negative emotions (which can be summarized with the terms worry, despair, sadness or uncertainty). Furthermore, 65% of those interviewed said they were aware that the public pension alone would not allow them to live with dignity after retirement.
Are these concerns justified? Certainly not for all workers, but for some, yes. In fact, one important detail should be remembered: those who began their career after 1995 will have a pension calculated with the contributory method, that is, based on the amount of contributions paid during their working life and not on the average of their last incomes (as it used to be). The more you pay, the higher your pension will be. It is therefore not difficult to understand which categories of workers risk finding themselves with a starvation pension: all those who have paid little money to INPS, because they have low incomes or because they have had discontinuous careers, with long periods of unemployment. They are the ones who today would need to build up a reserve income for old age, with a personal savings plan or with a supplementary pension fund. It is a shame, however, that few actually do so. According to the study by Raitano and Di Pietro, 68% of the unemployed and 50% of those who currently earn less than a thousand euros a month do not have any form of investment nor have joined supplementary pension provision.
The analysis also suggests an alternative or parallel path to that of pension funds, to which almost 10 million Italians have joined so far. The proposed solution is to subscribe to a Pac (capital accumulation plan) with ETFs (exchange traded funds), which are investment funds that can be purchased on the stock exchange (as is done with shares), have low commissions and follow the performance of a reference index, for example a stock or bond price list but also of raw materials. According to a simulation contained in the research commissioned by Trade Republic, in the long term a savings plan in equity ETFs has the potential to obtain higher returns than those generated by pension funds (see the article on the opposite page).
“Italians are well aware that the public pension system alone will not allow for a peaceful retirement”, says Emanuele Agueci (in the photo), regional manager for Italy, Ireland and the Baltics of Trade Republic, who adds: “the Our compatriots understand the need to integrate retirement with savings and private investment. With this study, we want to offer practical and at the same time scientific guidelines for sustainable investment in the long term.” The conclusions of Raitano and Di Pietro’s research, according to Agueci, are clear: “ETF savings plans are a very powerful complement to classic pension funds for planning your retirement”.
