Italy’s Pension Funds Supervisory Commission (COVIP) has called for stronger powers and the creation of a pension arbitrator in its 2024 annual report.

The Italian pensions regulator raised concerns that the current system is “very complex and fragmented” and therefore should be “simplified and rationalised”, which includes “strengthening the powers of COVIP”.

Furthermore, COVIP believes that the creation of a pension arbitrator would increase trust in the pension system.

Currently, it does not have the power to settle disputes between supplementary pension schemes and individual members, pensioners and beneficiaries, or between members and employers liable to pay social security contributions.

“The establishment of an arbitrator would allow members, pensioners and beneficiaries to obtain a decision on the dispute quickly, without the costs of legal assistance,” COVIP stated.

However, the authority warned that in an “increasingly complex context” and faced with an expansion of its functions, its “economic and human resources have not undergone significant adjustments”.

“Moreover, the presence of a regulatory constraint limiting the economic treatment of COVIP staff makes it difficult to find new professional skills. The authority needs to be strengthened, ensuring an increasingly qualified, organised and motivated structure that can continue to guarantee supervisory action that meets expectations,” it warned.

In 2024, COVIP carried out around 260 supervisory interventions, with over two-thirds related to governance and transparency issues. The authority also held approximately 90 meetings with supervised entities, responded to numerous technical queries, and provided feedback to pension fund members following complaints.

Inspections were carried out on 21 supplementary pension schemes, while transparency audits, including reviews of public website disclosures and sustainability-related information, were intensified.

Notably, the regulator began assessing the private areas of fund websites, with particular focus on how costs and returns are communicated.

In relation to ESG monitoring, a sample survey found that around 25 per cent of pension funds now incorporate sustainability factors into their investment policies, reflecting growing awareness of environmental, social, and governance concerns.

Financial controls were focused on fund-level risk management frameworks, in line with the requirements of the IORP II Directive. Meanwhile, oversight of legacy pension schemes, particularly those carrying biometric risk or undergoing rationalisation, continued, with consolidation activity concentrated among pre-existing funds in banking and insurance sectors.

In 2024, Italy’s pension fund sector demonstrated growth: Total assets reached €124.7bn, an increase from €114bn in the previous year. This expansion was primarily driven by favourable financial market conditions, particularly strong performance in equity markets.

Despite this growth, the investment portfolio of Italian pension funds continued to be dominated by fixed income instruments. Debt securities represented the largest share, amounting to €47.5bn, or 38.1 per cent of total assets.

Equities followed with a total of €24.3bn, accounting for 19.5 per cent, while real estate investments stood at €19.7bn, comprising 15.8 per cent of the overall portfolio.

A significant portion of pension fund assets remains invested in the domestic economy. At the end of 2024, investments in Italy totalled €46.5bn, or 37.3 per cent of total assets. This included €17.1bn held in real estate, representing 13.7 per cent of total assets.

Italian government bonds made up €15.5bn, or 12.4 per cent, while corporate securities reached €9.6bn, equivalent to 7.7 per cent of total assets. Within the corporate securities category, equity investments amounted to €8.7bn, and debt instruments accounted for €852m.

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