In a recent survey conducted by RBC Investor Services, more than three-quarters of Italian pension funds said new regulations that will impact the 94 billion Italian pension fund market will mean depositary banks will play a more important role for them.
The state pension regulator, Commissione Di Vigilanza Sui Fondi Pensione (COVIP), will give custodians even greater responsibility as schemes 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, RBC Investor Services says.
The new regulations, which will come into effect for the largest funds in 2013, require pension providers to give greater information on their stated investment principles and the instruments they wish to invest in. They also must provide details on expected returns, performance appraisals and control systems, assessment measures and procedures in place designed to achieve financial targets and safeguard existing holdings, RBC says.
All of the respondents to RBCs poll agreed the regulations will have a positive impact on the governance models of pensions; 43% were in strong agreement so. Most said compliance with the regulations would require them to partially reorganize their businesses, with 17% believing they would require significant organizational changes.
Most respondents (74%) believed the added administrative costs of compliance would cost less then 100,000. Only 17% thought the figure would be higher, while 10% predicted no cost impact at all.
Pension funds need to enhance efficiency, transparency, risk management and corporate governance in this climate of rising retirement costs and economic uncertainty, says Mauro Dognini, managing director of RBC Investor Services in Italy. 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.
(CG)