Occupational pension schemes, collective bargaining and the role of social partners

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Occupational pension schemes are becoming more and more important in Italy even though their full implementation is still difficult, both because the legal framework has not yet been consolidated, and because their form and content must be defined by the social partners through collective bargaining. The latter point still remains problematic, as no agreement has yet been reached as to whether pension schemes should be developed at national or local level. Nevertheless, evidence from recent collective bargaining at national and local levels shows that occupational pension scheme issues are growing in importance.

Court of Auditors rejects decree

In March 1997, the Court of Auditors (the accounting court that controls the acts of the public administration) rejected the Ministry of Labour's executive decree which established the rules and criteria for authorisation to enact occupational pension schemes (IT9702103N). As a result of this decision, which was hotly disputed, especially by the social partners, the implementation of pension schemes has once more been delayed. In fact, although the framework law that governs this matter was passed as far back as April 1993 within the context of the pension reform process implemented by the Government led by Giuliano Amato, since then it has not been possible to develop any new pension schemes. Initially, a number of obstacles of a fiscal nature prevented their launch, but even though these obstacles were overcome by the pension reform of Prime Minister Lamberto Dini and Minister of Labour Tiziano Treu in August 1995, today it is the lack of executive decrees that makes the realisation of the schemes (already included in many collective agreements) impossible.

The aims of the executive decree rejected by the Court of Auditors included the definition of the requirements of "respectability" and professional competence for the members of the various pension scheme bodies. The proposal put forward by the Minister of Labour was to limit the most restrictive rules to a quota (one third or one half, depending on the nature of the scheme) of the participants in these bodies, respecting in this way the spirit of the law. However, the Court of Auditors held a different opinion, being in favour of the application of more rigid requirements which would, in fact, exclude representatives of social partners from these bodies.

The Italian model

In the Italian model, occupational pension schemes (previdenza complementare) are based on collective bargaining. The law establishes that the exclusive method for the creation of a pension scheme is bargaining, thus overcoming a previously widespread practice whereby occupational pension schemes were developed through the unilateral initiative of the employer. In addition to this constitutive power, the law entrusts social partners with the definition of other essential aspects, including, first and foremost, the identification of financing sources. Furthermore, social partners are called on to play an important role in the operation of the scheme: joint participation of all signatories to the constitutive agreements is provided for in all the pension scheme bodies. In this way, a distinction has been made between the political functions of orientation and control, which are given to the scheme's board of directors (with joint participation) and the operational function of resource management, granted to professional managers (banks, broking companies, insurance companies and management companies of investment funds).

Collective bargaining on pension schemes

In spite of the abovementioned difficulties, collective bargaining in almost all sectors of the private sector has already dealt with the issue of supplementary pension schemes. The structure for occupational pensions currently being consolidated is the one which has been introduced experimentally in the chemicals sector with the creation of the so-called Fonchim national pension scheme. This scheme has already greatly exceeded the initial objective of a minimum of 30,000 pre-enrolments, and the first elections of representatives within the scheme's elected assembly - which oversees its board of directors - have already been held.

This model is based on a national industry-wide pension scheme with equal contributions by the employee and the employer, and with the assignment of part of the Tfr fund to the scheme. The Tfr (trattamento di fine rapporto) end-of-service allowance is a form of deferred pay withheld by the employer until termination of the employment relationship. The proportion of Tfr to be allocated to the pensions schemes is greater for employees with less seniority in a company and less for those with longer seniority (as older workers would not receive a very large pension owing to their shorter contribution period, while the costs to employers would be equally high). The metalworking agreement signed in February 1997 (IT9702202F) provided for the creation of a national pension scheme for the sector which should start from June 1998. Agreements in textiles and other minor sectors have done the same.

The public sector, on the contrary, appears to be lagging behind as various legislative steps are still missing which are necessary to create the conditions for the development of pension schemes.

With reference to the preference for national pension schemes, a new problem which relates to the overlapping of different bargaining levels recently emerged when some lower-level representatives of trade union and employers' organisations opted for the creation of pension schemes at decentralised level. The most recent case is the agreement signed in March 1997 by the Confindustria employers' organisation in the Veneto area and the regional organisation of the Cisl union confederation to create a pension scheme open to all workers in the region (IT9705109N). This choice has caused a heated debate which has seen clashes both between the regional and national top-level management of Confindustria and between Cisl and Cgil, with the latter openly taking sides against this agreement. From its point of view, Cisl considers that the regional level is a legitimate one to negotiate a pension scheme, because of the mandate to sign the agreement accorded by all the local industrial federations to the regional Cisl organisation.


The conflict between the Minister of Labour and the Court of Auditors reflects the opposing positions in a debate which is characterised by strong pressures (from banks and fund managers, for instance) aimed at excluding social partners from these bodies by heavily emphasising professional competence. In reality, this polemic appears to be largely a pretext in that it focuses, above all, on demolishing the bargaining model that the law wished to establish for the entire issue. However, we should not forget that such a model was designed by the government-trade union agreement of 8 May 1995, which was signed before the pension reform.

In reality, behind this "technocratic" argument, there are other more serious risks that relate to the independence of pension schemes. In fact, the requirement of professional competence set by the law - which, according to some, should be extended to all members of administrative and control bodies - are drawn from the existing law on financial intermediaries. Should the Minister of Labour's point of view not prevail, an extremely critical situation would arise with role confusion between: those in charge of orientation and control, who in that case would inevitably come from the world of insurance and finance, although the law stipulates that those functions must be granted to social partner representatives; and the financial partners in charge of resource management.

The importance of the stakes at issue has, therefore, led to a very worrying impasse involving a lack of pension coverage for millions of workers as well as the bargaining stalemate which has ensued. In many bargaining units, negotiations resulted in a decision to transfer resources from the immediate salary to the deferred one (ie pension schemes). However, the delayed start-up of the pensions schemes has threatened the validity of these agreements and could eventually lead to the re-opening of negotiations.

Finally, it is important to stress that in the case of regional pension schemes, the main reason that motivated Cisl to sign the separate regional agreement relates to the issue of participation of social partner representatives in the administrative and control bodies of occupational pension schemes. By signing a regional deal, Cisl could guarantee a more widespread involvement of workers than is currently possible in the national schemes. (Raffaele Bruni and Fabrizio Marino, Fondazione Regionale Pietro Seveso)

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