The PIRs have to comply with certain investment constraints in order to benefit from the tax exemption. The proposed legislation imposes certain constraints both on the composition of the assets of the PIR and on the holding period of the financial instruments held by the plan.The composition of the assets in the PIR is subject to captive investments and concentration limits.
In particular, the investments:
The main advantage of a PIR is certainly, in case the investment is maintained for 5 years, that of the tax exemption. Clearly, this benefit will only occur if the title gains; this makes the PIRs scarce in the short term.
One of the main risks of a PIR is high operating costs: no gain is higher than operating costs. In this respect, there are high operating costs for the PIR which cannot be ignored before the investment and which vary between 1.20% and more than 2% of the capital invested.
The limitation of the enterprises regarding the fields on which to invest, besides being a constraint, moreover, turns out to be a risk, in how much the investor is forced to maintain at least 70% of the capital invested in Italian enterprises. It is possible to state that the PIR are plans that the government has created to try to please everyone:
All in all investors have shown a certain interest in this form of saving in recent years and in fact, as early as 2017, the year of the launch of the PIR, the phenomenon has developed giving excellent signals to the market. Considering new PIR-compliant funds and the conversion of existing funds into PIR-compliant funds, cumulative funding was approximately €15.8 billion . In 2018, cumulative funding reached €17.4 billion. Although cumulative funding has grown, the same cannot be said of the yields that have suffered from the rise in the spread, confirming the fear of "Italy risk" of many insiders. Only 20% of the funds performed positively with an average gain of +1.28% while overall the market for PIR-compliant funds led to average losses of -1.02%. It should be borne in mind that the average operating cost alone was 1.71% and therefore the SGRs "ate" a large part of the tax exemption for private individuals.
On average, the management costs of a traditional fund are below 1.1%.
However, in 2018 there was increased cost competition between SGRs. In this respect, ETF funds have proven to be a good opportunity for investors.
The budget package of last May 2019 introduced some new features for the PIR, which were stipulated as from January 1 2019; these are some constraints added to the investment.
Unlike the old "RIPs", the new ones have to:
PMI Requirements Table
According to some scholars, the novelties of 2019 are destined to bring about the definitive bankruptcy of the sector. The new constraints added are expected to make it difficult for investors to compose a portfolio that will perform well in terms of tax advantages.
During the second quarter, the PIR funds recorded net inflows of 348,3 million euro, compared to -2,2 million euro in the first quarter of 2019 and total assets rose from 18,8 billion euro to 18,5 billion euro.
The Sole24Ore-Plus Observatory in July and August shows outflows of -151 million and -46 million, respectively, and net inflows from the beginning of the year of -546 million.
The changes made to the legislation are therefore drastically reducing the interest of the instrument.
Having recorded outflows during this year with the entry into force of the new constraints, the president of Assogestione has hoped for a return to the old rules and, in addition, the Minister of Economy Roberto Gualtieri said that you could revive the rules introduced by the budget law 2019.
Waiting to figure out if you will decide to return to the old rules are increasingly the number of investors who point their fingers at these new plans .
Restoring the old RIP rule, which had been successful in channelling savings to Italian companies, would certainly benefit most investors.