Over three-quarters of Italian pension funds expect depository banks to play a more important role for them as a result of upcoming regulation changes, according to a RBC Investor Services poll.

Due to come into force by the start of 2013 for larger schemes, the new regulations from state pension regulator Commissione Di Vigilanza Sui Fondi Pensione (COVIP) require pensions providers to give greater information on their stated investment principles and the instruments they wish to invest in. They will also be asked to provide added detail on expected returns, performance appraisals and the control systems, assessment measures and procedures in place designed to achieve financial targets and safeguard existing holdings.

Therefore this is expected to give custodians even greater responsibility, as the €94bn Italian pension fund market will require their support to produce more transparent financial reporting and control systems and to alleviate the additional administrative burden on their own internal processes.

Managing Director of RBC Investor Services in Italy Mauro Dognini said: “Pension funds need to enhance efficiency, transparency, risk management and corporate governance in this climate of rising retirement costs and economic uncertainty. It will fall to the custodian to support the pension funds with in-depth analysis of technical information in order to support the new regulations.”

The RBC Investor Services poll of pension fund professionals also found that all respondents agreed that the new regulations will have a positive impact on financial governance models of pension funds, with 43 per cent in strong agreement. Eighty-three per cent of those polled agreed that pension funds will require a partial structural reorganisation to comply with the new regulations, whilst 17 per cent believed significant organisational changes would be required.

Most respondents (74 per cent) believed costs from the added administrative burden of the reforms were unlikely to rise above €100,000. Only 17 per cent thought the figure would be higher and almost 10 per cent of respondents saw no cost impact at all from the new regulations.

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