Fondapi
Comparison with other Investments
Being able to save for the future is essential, and doing so by contributing to a negotiated pension fund (linked to your employment contract) is an excellent way, as it can perfectly integrate with other forms of investment already used; let’s look at the peculiarities of the pension fund compared to other investments.
Find the Right Balance
A corporate pension fund should not replace any of the ways you may already use to manage your money: it can work synergistically with various financial commitments, whether it’s a real estate investment, a savings account, or an Accumulation Plan (PAC) with ETFs.
Joining a negotiated pension fund like Fondapi can be one of the most effective ways to start saving for your retirement, by investing small monthly amounts.
Indeed, thanks to the inflow of TFR and employer contributions (only applicable when joining funds linked to your employment contract), the tax benefits, and the long-term effect of reinvested returns (compound interest), it is possible to build, even without any technical knowledge in financial matters, a good investment for your future.
All of the above contributes to growing the capital accumulated in the fund over time and, consequently, to increasing your income during retirement.
Invest starting from
€20 per month
The pension fund, compared to other types of investments, allows you to start with very low amounts.
The example we provide below simulates how, with a personal contribution of only €24 per month, younger individuals can save, over approximately 40 years of contributions up to nearly €280,000 (the €24 is supplemented by the accrued TFR and company contribution).
- Age: this column dedicated to each possible retirement age estimates the gross result of your pension fund.
- Cumulative Gross Contributions: the total contributed up to that year.
- Individual Position: the total of contributions and returns.
- Gross Lifetime Annuity: corresponds to the conversion of your pension fund into annual installments.
In the case of retirement at 67 with a total of €277,908, we would receive approximately €11,000 per year in supplementary pension.
For the simulation, we used our pension simulator.
What are the differences with an Accumulation Plan (PAC) in ETFs
The differences between a Pension Fund and a PAC in ETFs are not many, and in some ways, the functioning of these two forms of investment is also comparable.
In both cases, money is invested recurrently and for a certain period of time, aiming not for a gain based on financial speculation, but on the growth of the various securities that make up the reference index.
The pension fund compared to other investments: the applied taxation
The substantial differences between the different types of investments are found in the applied taxation. The Pension Fund, having a pension purpose by law, can offer a greater number of tax benefits compared to accumulation plans.
For example:
- the contributions paid annually are deductible from your income up to €5,164.57;
- the taxation on returns from equity securities from 26%, reserved for individuals, drops to 20%;
- the IRPEF taxation on the final redemption, i.e., at the time of retirement, is a maximum of 15% fixed. Furthermore, for each year of membership after the 15th, a tax discount of 0.3% per year is applied: this brings the taxation, after 35 years of membership in the fund, to a minimum of 9%;
- in the case of redemption by heirs, the pension fund is not subject to inheritance tax.
Deductibility
Deductibility of contributions paid to supplementary pensions up to €5,164.57 annually.
Taxation
IRPEF taxation of TFR and contributions paid to the pension fund favorably, up to a maximum of 23% for redemptions before retirement, and between 15% and 9% (depending on membership seniority) for liquidations following retirement.
The pension fund compared to other investments: Contribution
As for the inflow of capital to invest, the main difference is in the sources of capital.
In the case of accumulation plans, the source is generally a single one: your bank account. For pension funds, the main sources are:
- TFR, which the company pays directly to the fund;
- additional company contribution, due only in the case of joining a category fund;
- minimum voluntary contribution from the worker, which on average is around 1.5% of the RAL and varies based on the CCNL.
The pension fund compared to other investments: financial management and tax obligations
In this case too, the differences are numerous.
To start an accumulation plan, you need to find a broker or a brokerage platform, open an account on it, and then buy ETFs or other instruments based on your investment strategy. On one hand, you have extreme flexibility in defining your personal strategy, but on the other, you need to spend many hours studying and learning about the solutions offered by the market.
The pension fund, on the other hand, cannot offer this degree of flexibility; most funds offer different types of investments (the so-called compartments), each set on specific strategies aimed at achieving a series of predetermined objectives.
This process involves:
- the finance office of the fund, which guides and defines the choices, policies, and investment strategies;
- a financial advisor , chosen by the finance office, who supports the same office in defining strategies and monitoring markets;
- the financial managers, who are materially responsible for investing the capital that the pension fund collects
- a custodian bank, which holds the managed sums and monitors, together with the fund, compliance with investment strategies and policies.
Fondapi also uses the advice of a sustainable benchmark provider that assigns an ESG score to all the securities in which the Fund might invest; securities with the lowest ESG score are then removed from the list of securities in which Fondapi might invest.
Pension Fund and Tax Obligations
Also regarding the tax obligations on the member, compared to other investments, the pension fund is very advantageous; moreover, the member, except in some cases, does not have particular or difficult tax obligations to fulfill.
Income Tax Return (Mod. 730)
Excluding only the contributions that come from the member’s bank account, all other contributions are already reported to the Revenue Agency by the company through the Certificazione Unica.
Fondapi reports the contributions made to the Revenue Agency, and they are included in the member’s tax drawer.
ISEE Certification
Equivalent Economic Situation Indicator (ISEE) is an indicator that measures the family’s economic condition and constitutes the main tool for accessing certain bonuses or social benefits.
Regarding ISEE, the pension fund is not among the assets to be declared.
The only case in which information about the Pension Fund must be communicated is when the member, once retired, has opted for the pension benefit in annuity. The INPS instructions for completing the
