the pension fund and the health care industries, to exchange their exposure to longevity. finally, as asymmetric information and market incompleteness cannot be completely eliminated, governments could step in, acting as insurers of last resort at least for the risk of very large unexpected increases in aggregate longevity. this is a further reason for reducing their role as providers of insurance that could be readily purchased in financial markets. 4. the development of private pensions in italy since the mid - 1990s in italy the payg system has been in a lengthy phase of transition from a standard db system to a new ndc system. 12 from the very start of the reform process it was clear to policy - makers and experts alike that, in order to achieve an adequate level of retirement benefits, the new public pillar had to be supplemented by a well developed private pillar. the latter consists in two components, occupational and personal pension plans, both voluntary and of the dc type. the development of the private pension pillar witnessed an acceleration in recent years. one of the goals of the system has been to induce workers to divert contributions from the socalled tfr ( a severance payment scheme where worker ’ s contributions are retained by the employer and earn a rate of return of 1. 5 % plus 75 % of the inflation rate ) towards private pensions. in order to achieve this objective, the new system includes an automatic enrolment the introduction of “ hybrid products ”, which share characteristics of both db and dc schemes, is also often suggested. see visco ( 2006 ). see franco ( 2002 ). provision, whereby workers are enrolled in the pension scheme 6 months after they are hired, unless they explicitly choose to remain in the tfr scheme. it also significantly reduces the tax burden on private pension savings. starting from january 2007, the end - of - period capital accumulated over contributors ’ working lives is subject to a proportional tax rate that is equal to 15 per cent but can go down to 9 per cent depending on the length of the investment period ; 13 in comparison, the lowest personal income marginal tax rate is 23 per cent. our calculations show that the new italian ett system ( exempt, taxed, taxed ) is considerably more favourable than the eet system prevailing abroad. 14 the tax benefits of the new system are particularly valuable for high - income workers – with high marginal personal income tax rates – and for young workers, who can benefit from the favourable tax regime for a longer accumulation period. for example,

harmonize systems which are very different. in november, the ecb will launch a comprehensive assessment of the situation of the banks that will be supervised centrally ( of which 15 are italian ) ; these banks ’ assets represent 85 per cent of the euro - area banking system total. the exercise is a prerequisite for the coming into operation of the single supervisory mechanism and will last twelve months ; it will be carried out in collaboration with the national authorities and with the support of independent third parties. the evaluation includes three closely interlinked elements : a preliminary analysis of the banks ’ risk profiles, an examination of the quality of their assets and a stress test. it will be carried out using as a benchmark a ratio of 8 per cent between the banks ’ highest quality capital ( defined on the basis of the rules that will be introduced next year ) and their riskweighted assets. this is a threshold that ensures the availability of sufficient resources to cope with possible difficulties. the ecb and the eba will conduct the stress test in close collaboration. the methods and scenarios to be used for this exercise will be agreed and announced at a later time. prior to conducting the stress test, in fact, it is necessary that the results of the asset quality review are suitably incorporated into the banks ’ financial statements. the assessment is a critical juncture in the management of the crisis in the euro area and in european integration. it represents a fundamental exercise of transparency, designed to strengthen confidence in the banks ’ soundness and reliability and, where necessary, define the appropriate corrective measures. it will be conducted rigorously, guaranteeing absolutely equal treatment of all banks, which are now subject to highly heterogeneous supervisory systems and accounting practices. the definition of non - performing exposures used will be that recently adopted by the eba, which is in line with the one used in italy. where data are lacking, estimates will be employed. the analysis will cover all types of risk and be based on current prudential rules. the risks of highly opaque instruments will be assessed with special care. account will be taken of the diversity of methods by which banks using internal rating models calculate risk - weighted assets. the methodology of the exercise will be clearly explained, and the market will be informed of the results and supplied with the information needed to evaluate them properly. the bis central bankers ’ speeches involvement of outside experts, avoiding potential conflicts of interest, will enhance the credibility of the exercise. together with the results of