Supplementary pensions are not taking off in Italy and among young workers it is a confirmed flop. It would be of little use to push subscriptions to investment funds with further tax incentives because the problem is not government discounts, but the lack of economic availability. Precarious and poorly paid work in a scenario of returning inflation certainly does not help in this sense.
In other words, if young workers do not have enough money, at the end of the month there is little left to allocate to supplementary pension provision.
It is true that these resources come from the TFR, but in the face of precarious and underpaid jobs, as mentioned, it makes little sense to worry about the future when the present is also very uncertain. In short, young people, knowing that a permanent job no longer exists, prefer to hold on to the TFR to use as a social safety net at the right time.
Supplementary pensions, young people remain at a standstill
A recent study by the University of Cambridge highlights the real difficulty of the pension fund industry. The Wisdom of Rome which calls into question the actual convenience of supplementary pensions in Italy. According to what has emerged from the scholars, they are of little use to workers who can afford them and are instead too expensive for those who would actually need them.
The latest Ambrosetti report also echoes the university study, highlighting how a robust pension fund market cannot be developed without the contribution of young workers. Unfortunately, they suffer from a major liquidity constraint, in addition to a high level of uncertainty about the future caused by job insecurity. Despite having perhaps achieved important qualifications.
Therefore, the pressure on the government by the lords of finance and bankers to further reduce taxes on supplementary pension income to increase membership in the funds seems useless. Even the silent consent has not produced the desired result.
After all, there is no money to allocate to the second pillar with all the risks associated with pension funds that are not to be underestimated.
Supplementary pensions are of little use to those who can afford them
On the contrary, supplementary pensions are of little use to those who can afford them, as stated in the La Sapienza report. Or rather, a worker with a secure and well-paid job has little use for getting a supplementary pension. The one from INPS will be enough for him, which, despite the contributory calculation system, will still be adequate and sufficient to live on.
According to the State Accounting Office, in 45 years the net pension amount of a twenty-year-old today would be about two-thirds of the last salary. A replacement rate that is not very different from what is paid out today by INPS with the mixed calculation system of annuities. The only difference is that, for the same amount, the pension will be paid later than today.
The data confirms this thesis. Membership in 2023 increased by only 3%, compared to much more optimistic forecasts. And things are not going any better in 2024 despite the good position of global financial markets which are the ones that make pension fund returns rise or fall.
According to data processed by BFF, in the first three months of the year, the returns of the negotiable funds fell by 0.6%, while those of the open-ended ones lost 0.8%. The decline was mainly caused by the negative performance of the equity lines, which recorded a deficit of about 2%. The monetary and bond sectors, on the other hand, contained the losses, closing the month with a positive sign.
