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1. Introduction
The preference for the dominated alternative between two types of personal pension plans (PPPs) is a decade-long puzzle in the Italian private pension system, which includes also occupational schemes (Fondi pensioni chiusi or FPNs); for a recent overview see Ricci and Caratelli (2017).
‘New’ Personal Investment Plans (PIPs), a type of PPPs introduced in 2007 and sold only by insurance companies, are much more widely subscribed than the alternative open pension funds (FPAs), offered by insurance companies as well as by banks and bank controlled management saving companies. The increase of PIPs between 2007 and 2018 was times the corresponding value for FPAs; the ratio was 4.3 times between 2010 and 2014, the period of our econometric investigation (Table 1)1.
Table 1. Subscriptionsa and subscribersb (in italics, years 2016 and 2017) to the Private Pension System (end-year data, thousands)c
| 2007 | 2010 | 2014 | 2015 | 2016 | 2017 | 2018 | |||
| Occupational Pension Funds (FPNs) | 1,989 | 2,011 | 1,944 | 2,419 | 2,597 | 2,561 | 2,805 | 2,762 | 3,001 |
| Open Pension Funds (FPAs) | 747 | 848 | 1,056 | 1,150 | 1,259 | 1,230 | 1,374 | 1,343 | 1.462 |
| PIPs | 486 | 1,160 | 2,446 | 2,601 | 2,869 | 2,759 | 3,104 | 2,969 | 3,276 |
| Post Officed | 367 | 711 | 943 | ||||||
| Grand totale | 4,560 | 5,272 | 6,540 | 7,235 | 7,787 | 7,147 | 8,299 | 7,586 | 8,747 |
Source: COVIP (2018).
a Data on subscriptions may include double counting referred to members enrolled in more than one pension fund.
b Data on subscribers in only one pension scheme available only since 2016 (see Online Appendix).
c Data including also subscriptions with no contributions in the reference year.
d Source: Poste Italiane (various years).
e ‘Old’ PIPs and other types of pension funds included.
The share of individual subscriptions accounted for about 85% of FPAs at end-2017; the share was equal to 72% among dependent workers (COVIP, 2018). Subscriptions (only individually allowed) for PIPs were over three fifths for dependent workers, about one fifth each for self-employed and for others.
PIPs' averaged annual net returns were however consistently lower (Table 2). Moreover, PIPs' Synthetic Cost Indicator (SCI), estimated by the Supervisory Pension Authority (COVIP) as a percent of the accrued capital, was also consistently higher (Table 3)2.
Table 2. PPPs and sub-funds by investment – compound net annual return rates (end-year percentages)
| 2009–2014 |