While existing Italian legislation already broadly reflected many of the IORP II provisions, a new Legislative Decree has introduced new requirements on governance, in particular, in relation to written policies dealing with risk management, internal audit and (where relevant), actuarial and outsourced activities. As such, IORP trustees and managers now need to manage some significant changes.
IORP II will generally result in members in Italy having greater access to information. For example, changes are being introduced to pension benefit projections so that where, for example, these are based on economic scenarios, the information includes best and worst-case scenarios. Members will also get additional information during the pay-out phase. In addition, new information requirements provide for the disclosure of IORPs’ financial statements, including key data relating to manager remuneration.
There are fewer changes on the investment side because, for example, Italian legislation already provides for the ‘prudent person principle’. One new requirement, however, is for IORPs to take into consideration the potential long-term impact on their investments of ESG factors.
Depositaries are already required in Italy, but the new legislation will strengthen their role and responsibilities.
In terms of governance, Italian IORPs will need to adapt their organisational structures to meet the test for ‘sound and prudent management’. The internal audit and actuarial functions are also new, as is the remuneration policy requirement.
The ‘fit and proper’ person requirements already feature in Italian pensions legislation. Trustees and pension scheme managers must produce certain documents to demonstrate that they meet this test.
The most significant change in relation to cross-border activity is the new ability to transfer of all or part of a pension scheme's liabilities, technical provisions, and other obligations and rights to a receiving pension scheme in another member state. The Italian Pensions Authority (COVIP) is in the process of setting up new rules and procedures to support cross-border activity.
In Italy, the main pensions challenge is to bring more people into pension saving. Currently the proportion of employees who choose to enrol into a supplementary pension arrangement is small.