Fondapi
Your Supplementary Pension
The supplementary pension is a form of retirement savings; in addition to the INPS pension (known as the first pillar), it constitutes a second source of income during retirement age and, therefore, represents the second pillar of the Italian pension system.
The purpose, given the progressive reduction of the INPS pension allowance, is to contribute to maintaining an adequate standard of living even after retirement. Given its social function, savings occur in a protected regime and are tax-advantaged.
Special mention should also be made of the R.I.T.A. (Anticipated Temporary Supplementary Income), which allows workers to retire before reaching the pension requirement.
How supplementary pension and the need for a supplementary pension came about
From the earnings-related system to the contribution-based system.
The Italian public pension system operates according to a pay-as-you-go system: this means that today’s pensions are paid by workers currently employed; their pensions will be paid, in turn, by future active workers: this is the so-called “intergenerational pact”, active since the 1970s.
The Italian demographic trend, characterized by a constant decrease in births and an increase in average age, has on one hand reduced the number of workers, and on the other increased the number of those entitled to a pension. Inevitably, this has created a significant deficit in the Italian State budget, forced to go into debt to pay pensions.
Over the years, numerous pension system reforms have been introduced which, while guaranteeing its economic sustainability, have at the same time increasingly eroded the pension allowance of future retirees; the transition to the contribution-based system, which penalizes the pension amount more, occurred precisely for this reason.
Supplementary pension has been designed as a support for mandatory pension. It is a system that can be implemented on a voluntary basis that allows obtaining a supplementary pension, with the aim of ensuring an adequate future standard of living.
In addition, the legislator has introduced the possibility of accessing accumulated sums for particular needs that may occur during a person’s career and life: for example, it is possible to request advances under certain conditions, or total or partial redemptions under other conditions.
How
the supplementary pension is constituted
Pension funds operate in financial markets according to the “capitalization” mechanism: through companies and workers they collect contributions at predetermined intervals and invest them according to the management line (sub-fund) chosen by the member.
Upon reaching the pension requirement, the accumulated capital (given by the sum of contributions paid and returns obtained) is paid out in the form of a supplementary pension in capital; the liquidation can, specifically, be paid in a single tranche or in installments (in this case, it is referred to as installment liquidation).
Types of pension funds
The pension fund, as the name suggests, is the tool designed and conceived to build a supplementary pension.
In Italy, there are three different types of pension funds: here’s what they are and how to choose the most suitable one for your needs.
Negotiated (or closed) pension funds
Among these is Fondapi: membership in these funds is reserved exclusively for specific categories of workers and arises from the agreement between trade associations and worker representatives.
Open pension funds
As the name suggests, membership in this type is open to all those who intend to build a supplementary pension, regardless of the category of employment contract; they are primarily established by banks and insurance companies.
PIPs (Individual Pension Plans)
They are aimed at all those who, regardless of their employment situation, intend to build a supplementary pension; moreover, they are established solely by insurance companies.
The difference between these types of funds is mainly related to their cost; negotiated pension funds (linked to the CCNL) have on average lower costs than the other two types: this is because by statute they are non-profit companies, meaning they do not have to generate profits and remunerate shareholders.
At the same time, the costs related to promoting the Fund are minimal and the subjects involved in promotion on the territory are the trade unions.
Finally, the last major difference is the composition of the Board of Directors (BoD): in category funds, it is composed equally of worker representatives (CGIL, CISL, and UIL) and company representatives (CONFAPI in the case of Fondapi).
In the image, we report the average Synthetic Cost Index (ISC) of the various supplementary pension forms. The same supervisory authority has estimated that an ISC of 2% instead of 1% can reduce the accumulated capital after 35 years by about 18%, for example, reducing it from 100,000 to 82,000 euros.
Fondapi’s ISC compared with the average cost of other closed, open and PIP funds
The image comprehensively shows all Fondapi costs. More details on the costs of operations or services can be found in the “Costs” Sheet.
The benefits of joining supplementary pension
For a comprehensive list of benefits related to supplementary pension, we invite you to consult the page on advantages, available here!
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.
Company contribution
Company contribution: consists of a payment by the company of an additional contribution entirely at its expense, such payment is the worker’s right only in case of membership to negotiated funds and payment of the contribution from the paycheck at their own expense.
Advances
Possibility to request advances or partial or total redemptions upon the occurrence of certain specific conditions.
Investments and financial management
At the time of joining, the worker is free to choose the investment compartment most in line with their personal profile.
Fondapi’s management, oriented towards a sustainable investment policy, provides three lines.
Growth
Guarantee
A compartment composed of 90% bond securities, with the presence of an insurance guarantee that, in case of negative returns, allows obtaining sums at least equal to what was paid in.
Apart from risk propensity, which varies from person to person, the theory related to compartment choice is based on the investment time horizon: the longer the horizon, the more it is recommended, during the accumulation phase, to orient towards compartments with a higher equity component, then scaling to less equity compartments as retirement approaches.
For more information on investment compartments and obtainable returns, read the in-depth analysis available by clicking here.
The payout: two types of supplementary pension
Before talking about supplementary pension, it is necessary to distinguish between:
Capital benefits
These are liquidations made by the pension fund that materialize with a single liquidation, without any fractionation of the amounts over time; this is the case of advances, redemptions but also of many retirement liquidations that are paid out by Fondapi in about 70-80 days.
Annuity benefits
These are the supplementary pensions, i.e., periodic payouts that are paid to those who have joined Fondapi; this is the case of some retirement liquidations that are paid for the entire life of the worker and the RITA (Anticipated Temporary Supplementary Income): an annuity that can be requested by workers close to retirement but left without work, and which ceases to be paid upon reaching pension requirements.
The supplementary pension can consist of an annuity benefit that is paid periodically to the retiree as long as they are alive. Exactly as happens with the basic pension (for example, from INPS).
Is the supplementary pension in annuity form always mandatory?
The answer is no. The annuity is mandatory only for those who have accrued higher contribution positions. One must compare the accrued pension savings with the amounts reported in the
- the gender of the member;
- the age of the member requesting the liquidation;
- the value of the social allowance, which is recalculated annually.
Consequently, the threshold values will also be recalculated annually and will undergo variations of negligible entity. Specifically, if the accrued sum is lower than the threshold value, the retiree will be free to receive the entire liquidation in capital, without any fractionation (capital benefit, no annuity); if instead the accrued sum is higher than the threshold value, the retiree will be obliged to convert at least half into an annuity, which will then become a supplementary pension.
Fondapi does not only pay out supplementary pensions; there are also many other benefits, including:
- advances for healthcare expenses, for purchase or renovation of the first home, and for further needs that do not need to be justified;
- total and partial redemptions, for example following resignation or dismissal;
- liquidations for retirement in capital form.
Customize installments and frequency of your supplementary pension
At the time of accruing the right to pension, the member who wants or will be obliged to request the annuity, will have to choose:
- the frequency of annuity payout, i.e., how often to receive the supplementary pension;
- the annuity most suitable for their needs among the six different types offered by Fondapi, each with different conditions and guarantees.
By clicking here you can view the different types of annuities, the payout frequencies and some annuity examples.
To make some projections of your income at retirement age, you can use the two tools shown below:
Pension simulator
Annuity calculation engine
The protections for members
The amount paid and accumulated in the pension fund is strongly protected: in particular, the resources paid are unseizable, unattachable and cannot be touched even in case of closure or bankruptcy of the pension fund; in the latter case, members’ positions are liquidated or transferred to another pension fund.
Another important protection is that, in case of death before supplementary pension, the amount accumulated up to that moment belongs to heirs or other subjects possibly indicated, without any inheritance tax.
Is retirement approaching?
If you have less than 6 months until retirement and want to be contacted by Fondapi for personalized consultation, write an email to pensione@fondapi.it indicating your name and a telephone contact: we will contact you as soon as possible!
Or, click the button below and discover all the ways to get in touch with us!
