Medium and long-term investement instruments, designed for small investors who are entitled to preferential tax treatment if certain conditions are met.


The PIR is one of the most discussed phenomena in the financial world in recent years; the data presented by Asseogestioni at the last event “Salone del Risparmio” state that more than half of the 800,000 investors, who have subscribed to PIR, have their first experience with mutual funds. These numbers show that this instrument has gained a consensus; the careful investor, however, will take into account the fact that, in the face of the tax incentive, there are several risk factors affecting investment. This document gives an overview of the PIRs, the current context in which they operate, the new reforms in which they are involved and what is expected in the future from these plans.


Individual Savings Plans, known by the acronym PIR, are dedicated to small investors, who under certain conditions guarantee tax exemption. The PIR are introduced by the budget law of 2017 with the objective of conveying savings and increasing investments towards Italian companies, in particular small and medium-sized enterprises, by proposing to the individual investor a programme, which, if complied with, it shall ensure the absence of taxation. A PIR is a legal framework that can take different forms: mutual fund, asset management, insurance policy or securities depository (in the latter case it is an autonomous management of the natural person).
They are managed by the savings management companies, SGR , and only offered to natural persons resident in Italy; each person can also hold only one PIR and a PIR cannot be co-tested with more people. This document gives an overview of the PIRs, the current context in which they operate the new reforms in which they are involved and what is expected from these plans in the future.


Investment constraints and tax benefits (2017 regulation)

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:

  • Must be made up of at least 70% of financial instruments issued by Italian and foreign companies (EU and EEA) with a permanent establishment in Italy. Of this 70% at least 30% of this share (21% of the total) must be invested in instruments issued by companies that are not listed in the index ftse mib of Italian Stock Market;
  • The remaining 30% can be invested in any financial instrument.

  • These constraints have the aim of channelling household savings towards productive investment and in particular, towards enterprises for which the financial requirement is greater and that they have greater difficulty to find resources through the banking channel the increase and the development of the same ones. As regards concentration limits:

  • The amount of the investment in PIR may not be invested for more than 10% of its total value in securities issued or entered into with the same issuer or other company belonging to the same group.

  • This constraint serves to ensure adequate portfolio diversification to the saver.
    A further constraint concerns the 5-year term of the securities. This constraint prevents uses in the plan from being made for speculative purposes and ensures that target enterprises can rely on the capital received for a medium/long period.
    Finally, the minimum threshold for investment in a PIR is EUR 500, the maximum threshold for EUR 30000 per year.
    Those investing in a PIR enjoy substantial tax advantages. Only if the investment is maintained more than 5 years, in fact, the investor does not have to pay the 26% tax on the capital obtained. This means that, for example, on an investment of 150.000 euros, assuming an average yield of 6% per year can be obtained up to 23.000 euros of gain; In general, up to EUR 260 in taxes can be saved for every EUR 1000 of return.


    Risks and advantages of an investment in a PIR

    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:

  • the SGRs which store important commissions;
  • the companies which will see capital arrive thanks to the investor who accepts the constraints of the RIP;
  • the investor himself who will see economic benefits only if the amount obtained in the long run exceeds the management costs.

  • In particular, it should be borne in mind that there is no possibility of earning for returns below 5% per annum.


    Before the 2019 reform

    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.

    May 2019: the implementation decree for the new PIR

    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:

  • Invest at least 3.5% of its assets in Italian venture capital funds;
  • Invest at least 3.5% in shares of SME listed on the AIM segment of the Italian Stock Exchange.

  • SME, in particular, are small and medium-sized enterprises which, in order to be included in this category, must comply with the employment and financial limits set by the European Union in the table:

    PMI Requirements Table

    TypeEmploymentRevenue (in mlns Euro)Total Budget (in mlns Euro)
    Medium Enterprise < 250 ≤ 50 ≤ 43
    Small Enterprise < 50 ≤ 10 ≤ 10
    Micro Enterprise < 10 ≤ 2 ≤ 2


    The disadvantages of the new reform and the current state of affairs

    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.


    In conclusion, taking up the words of the president of Assogetioni Corcos, "These products have had the great merit of bringing the retail public closer to the capital market, the entrepreneur closer to the stock exchange, of providing liquidity and of having encouraged IPOs. They have given vitality to a market that is now at a standstill", although the changes in 2019 have greatly slowed the growth of the phenomenon, in 2020 there remains hope for many retailers that they will return to the previous regulation to review the merits mentioned by Corcos. The aim for the future is to return to the previous version by amending the legislation in force since last January. All that remains is to wait for the Budget Law 2020 to see if the PIR can have another opportunity to demonstrate their usefulness within the capital market.