Occupational pension schemes


What are the main types of private pensions and retirement plans that are provided to a broad base of employees?

The main types of private pensions and retirement plans that are provided to a broad base of employees are closed pension funds and open pension funds.

Closed pension funds (the second pillar system) are set up through CBAs, including those signed at company level, and are sponsored by trade unions as associations for the benefit of a particular group of employees. Examples of closed funds include:

  • the Cometa pension fund, which is set up under the national CBA for employees in the metalworking and plant installation industries and related sectors;
  • the Fonchim pension fund, which is set up under the national CBA for employees in the chemical and pharmaceutical industries;
  • the Previndai pension fund, which is set up under the national CBA for executives in the manufacturing industry; and
  • the Laborfonds pension fund, which is set up under a regional CBA for employees who work in the Trentino Alto Adige region of Italy.

Companies in the financial services sector - including insurance companies, banks and asset management companies - manage the assets of these pension funds.

In December 2018, membership of closed pension funds was about 3.0 million.

Open pension funds are created by financial services companies, as specific, separate and autonomous assets. The beneficiaries of these funds are not limited to a particular group of people or employees, and membership can be on an individual or collective basis. In December 2018, membership of these pension funds was about 1.4 million

There is also a third pillar system, which provides individual pension schemes (PIPs), implemented through individual membership to the above-mentioned open pension funds or life insurance contracts. PIP assets are separate and autonomous within the companies. The beneficiaries of these funds are not closed or limited to a particular group of person or employees. In December 2018, the membership of these funds was about 3.2 million.

In any case, membership of pension plans in the second and third pillars (all based on the funded system) is voluntary. The only types of the above-mentioned private pension and retirement plans provided to employees are based on defined contributions.

In addition, there are some ‘old’ pension funds that were set up before the first law regarding private pensions came into force and are still in operation. These are both broad-based and non-broad based pension funds. In December 2018 membership of these particular pre-existing pension funds was approximately 650,000.

Law No. 252 of 5 December 2005 makes specific regulations regarding these funds, which will not be examined in detail here.


What restrictions or prohibitions limit an employer’s ability to exclude certain employees from participation in broad-based retirement plans?

There are no specific restrictions or prohibitions that limit an employer’s ability to exclude certain employees from participation in broad-based retirement plans. Please note that an employee’s right to participate in a private pension scheme is determined by the same CBA that sets up the fund itself. Having said that, an employer is always required to comply with the employment law anti-discrimination rules.

Can plans require employees to work for a specified period to participate in the plan or become vested in benefits they have accrued?

Yes, they can. For example, a number of pension plans exclude employees during their probationary period.

The right to pension benefits accrues at the time of vesting, with the same requirements as for access to the state pension (see above) and in general with at least five years’ contributions.

Overseas employees

What are the considerations regarding employees working permanently and temporarily overseas? Are they eligible to join or remain in a plan regulated in your jurisdiction?

Employees who work abroad are eligible to join or remain in a private pension scheme governed by Italy’s jurisdiction, provided that they have been duly informed and they meet the other requirements for membership under the by-laws and regulations of the scheme.

In such cases, the levels of contributions required by the employees are generally the same as those required of employees who work in Italy.

Certain private pension schemes allow for the suspension of contributions during the member’s period overseas.


Do employer and employees share in the financing of the benefits and are the benefits funded in a trust or other secure vehicle?

The employer and the employees usually share in the financing of the benefits. If the private plan is set up under a CBA on a collective enrolment basis, the amount of contributions of both the employer and the employee is fixed by the CBA itself. An employee’s contributions to private pension funds are not considered part of an employee’s remuneration, and so are not included in the annual calculation of severance indemnity (TFR) (Italian Supreme Court decision of 12 March 2015, No. 4949).

The COVIP supervises the investments and sets forth the rules governing initial and periodical information to members.

The contributions, which are collected by pension funds, are invested in secure vehicles provided by law and usually managed through:

  • agreements with insurance companies;
  • agreements with asset management companies;
  • subscription or acquisition of shares of real estate companies;
  • units of closed-end mutual funds real estate; and
  • subscription and acquisition of shares in closed-end mutual funds.

What rules apply to the level at which benefits are funded and what is the process for an employer to determine how much to fund a defined benefit pension plan annually?

Not applicable. (See question 8.)

Level of benefits

What are customary levels of benefits provided to employees participating in private plans?

Not applicable. The data is not available.

Pension escalation

Are there statutory provisions for the increase of pensions in payment and the revaluation of deferred pensions?

Generally speaking, there are no statutory provisions for the increase of pensions in payment and the revaluation of deferred private pensions. However, in the case of the ‘tacit consent’ contribution of the TFR (see question 43) the by-laws and regulations of the private pension schemes must provide for the investment of these funds prudently, in such a way as to guarantee the repayment of capital and returns that are within the parameters provided by state and EU legislation, at least at the rate of appreciation of the TFR.

In addition, private pension benefits (under the defined contribution regime) may be paid in capital, according to the present value, up to a maximum of 50 per cent of annuity and the accrued contributions and returns.

Death benefits

What pre-retirement death benefits are customarily provided to employees’ beneficiaries and are there any mandatory rules with respect to death benefits?

The law provides that, in the case a member of a supplementary pension scheme dies prior to vesting the right to pension benefits, the whole sums accrued are redeemed by the member’s heirs or beneficiaries designated, whether they are natural or legal persons.

In the absence of such persons, in the case of private plans set up under CBAs, the accrued amounts shall be forfeited to the pension fund, whereas in the case of private plans (PIP) they are donated to charities.


When can employees retire and receive their full plan benefits? How does early retirement affect benefit calculations?

Employees can retire based on the above-mentioned criteria and receive the plan’s full benefit, which may be provided in capital, according to the present value, up to a maximum of 50 per cent of the final principal and interest accumulated, and in an annuity.

Private plans also provide that, in the event of termination of employment and the employee remaining unemployed for more than 24 months, the pension benefits can be advanced, at the request of the member, for up to five years, compared with the requirements for access to benefits under the state pension scheme to which he or she belongs.

Early retirement affects benefit calculations and can decrease the amount of the employee’s benefit as regards the old-age pension.

COVIP is going to approve new rules to avoid any sexual discrimination for men and women to the pension benefits in the event of termination of the employment relationship.

Early distribution and loans

Are plans permitted to allow distributions or loans of all or some of the plan benefits to members that are still employed?

Loans are not allowed by law. However, there is a provision to distribute a part of the accrued funds while the contributor is still working (eg, for healthcare costs incurred as a result of serious illness or for the purchase of a first home), but this is only permitted after eight years of contributing to the scheme.

Change of employer or pension scheme

Is the sufficiency of retirement benefits affected greatly if employees change employer while they are accruing benefits?

No, retirement benefits are not greatly affected as the law provides for such an occurrence. In particular, if employees move from job to job during the period that they are accruing benefits and they lose the right to participate in the scheme, the by-laws and regulations of such a pension scheme must provide for the transfer of the accrued benefits to another scheme of the employees’ choosing. Generally speaking, the transfer of pension funds is exempt from any tax or social security liability.

In what circumstances may members transfer their benefits to another pension scheme?

Members may transfer their benefits to another private pension scheme when they move job and there is a private pension scheme in the new company that they are entitled to join.

In addition, after two years in a private pension scheme, members are entitled to transfer their entire benefits to another pension scheme. In exercising such a right, employees shall be entitled to join the pension scheme of their choice and to transfer the TFR accrued and any contributions from the employer, to the extent and in the manner prescribed by their employment contract or CBAs.

Investment management

Who is responsible for the investment of plan funds and the sufficiency of investment returns?

The manager of a pension scheme must ensure that the scheme’s funds are managed in the interests of the members, as well as in accordance with the law and regulations in force and the rules of the pension fund itself, on the basis of the directives and forms issued by the COVIP.

The fund manager submits all data and information regarding the fund to COVIP, in accordance with the requirements of the regulator.

The same information is also sent simultaneously to the pension scheme’s supervisory body.

The fund manager’s duties include monitoring:

  • compliance with the investment limits in the aggregate and for each investment line that makes up the fund;
  • transactions involving conflicts of interest; and
  • good practices and governance to ensure greater protection of its members.

The pension scheme’s supervisory body represents the interests of members and ensures that the administration and overall management of the scheme are in line with the member’s interests, also on the basis of the information received by the scheme’s manager. The supervisory body must report any irregularities to the board of directors of the fund and to the COVIP, which is the only supervising authority in Italy.

The occupational pension funds manage their assets through agreements with institutions provided by law (see question 10), which are selected in accordance to COVIP guidelines and, in order to ensure the transparency of the process and consistency between objectives and management methods, determined in advance by the funds’ directors. The agreements must contain a number of elements provided by law, including:

  • the institutions’ guidelines concerning the identification and allocation of risk and all the information regarding it and the transfer of the investment in another member state;
  • the terms and the ways pension funds can exercise the right of withdrawal; and
  • the pension funds’ voting rights.

The criteria for the identification and allocation of risk in the choice of investments must be specified in the by-laws of the pension fund. After consultation with the COVIP, the Minister of Economy and Finance issued a decree identifying and regulating a number of elements, including the types of assets in which pension schemes can invest their funds and maximum limits on investment, and the criteria for investment in various types of securities (Ministry Decree of 19 June 2015).

Reduction in force

Can plan benefits be enhanced for certain groups of employees in connection with a voluntary or involuntary reduction in workforce programme?

Yes, they can, if the by-laws and regulations of such a pension fund so allow and are in accordance with the CBA.

Executive-only plans

Are non-broad-based (eg, executive-only) plans permitted and what types of benefits do they typically provide?

Non-broad based plans are permitted for certain categories of employees (eg, executives) and provide variable benefits. As for all employees, the new private pensions and retirement plans must be based on defined contributions. (See question 8.)

The COVIP is currently applying pressure by way of ‘moral persuasion’ to have the old non-broad based pension plans combined with broad-based pension plans.

How do the legal requirements for non-broad-based plans differ from the requirements that apply to broad-based plans?

In cases of collective membership involving the enrolment of at least 500 workers in a single company or a single group, the supervisory body must be complemented by a representative designated by the same company or group and a representative of the workers.

Unionised employees

How do retirement benefits provided to employees in a trade union differ from those provided to non-unionised employees?

The question is not relevant. There is no distinction made between union and non-union employees.

How do the legal requirements for trade-union-sponsored arrangements differ from the requirements that apply to other broad-based arrangements?

Unlike private pension schemes sponsored by insurance companies for individual employees (which can be set up as specific, separate and autonomous assets within the same companies), pension funds sponsored by trade unions can only be set up externally as a separate legal entity. In addition, the composition of the board of directors and supervision are different (eg, they must fulfil the criterion of equal participation of representatives of employees and employers), as is the model to manage their assets (eg, they must manage their assets through conventions with the external institutions as provided by law; see question 12) and the source of financing (eg, the level of contributions of both the employer and the employee can be fixed by the CBA).