on a small set of elementary series, even if they are well known and widely used, invariably produce much poorer results in terms of smoothness and reliability than those obtained by carefully constructing the “ common factors ” as is done with € - coin ( see figure 4 ). figure 4 : “ cherry picking ” the second advantage of using many series in a formal way to construct € - coin is the possibility of assessing in continuous time the impact of the news contained in any of these series on the indicator. this can best be seen by referring to a real episode, such as, for example, the recent turmoil in monetary and financial markets and the surge in uncertainty it has produced. since most forecasts are typically derived from quarterly macro - econometric models, they are still necessarily based on information gathered to a very large extent ahead of the recent financial crisis. recent news are typically incorporated in a judgmental way and can usually be reflected in the forecast only as “ downside risks ”, and even then only rarely with probabilities clearly spelled - out, for instance with the help of a fan - chart. with the information at hand, almost all forecasters have suggested in the last few weeks that the short - term economic outlook for the euro area remains broadly in line with the picture we had before the summer, i. e. the cyclical expansion will continue in the second half of 2007 at a pace only slightly lower than what was expected in the spring. however, an issue worth investigating could be whether the initial conditions underlying these projections have changed or not, perhaps reflecting effects from the recent financial developments. what information does € - coin contain in this respect? first of all it confirms the overall positive outlook pointing to an underlying growth rate still between 2. 5 and 3 per cent for the euro area as a whole. the modest increase in june and july, that interrupted a weakening trend that started in the first half of the year, was followed in august by a return to a lower growth rate. however, the underlying growth is still higher than what was observed until the first quarter of 2006. to assess the impact of the august news on the state of the euro - area economy, we compared the estimate of € - coin obtained at the end of august with an alternative estimate obtained assuming that we had no august data concerning survey expectations and financial markets, thus replacing the actual data with their forecasts, as it is the case for those components of € - coin that are not yet available when the

by the pension funds during the accumulation phase and the end - of - period capital ) are taxed. in contrast, in eet systems ( exempt, exempt, taxed ) the first two components are tax - exempt while the end - of - period capital is taxed. the comparison between the two systems depends crucially on the tax rates applied in each stage. the main advantage of the italian ett system is represented by the very low tax rate on the end - of - period capital ( see cesari, grande and panetta, 2007 ). see cesari, grande and panetta ( 2007 ). there is nonetheless ample room for improvement, as the percentage of enrolled workers remains relatively low. in fact, at the end of june membership rates were equal to only 22 per cent for private sector employees and 28 per cent for occupational funds. as a result of the low membership rates and the short life of the system, the pool of assets managed by pension funds is still very small : in 2005 it amounted to 3 per cent of gdp, against an oecd average of 88 per cent. since then it is likely to have increased by only a few percentage points. in the netherlands, the leading country in europe, pension fund assets are 125 per cent of gdp. 16 the lag that distinguishes our country primarily reflects insufficient information and awareness about the need to supplement public pensions with private schemes, but it is also due to workers ’ low levels of financial education. the lack of solid trust in the functioning of financial markets is also a factor. but how can we stimulate the growth of this sector? one critical issue is information. despite the efforts recently made by the government, surveys show that italian workers are still not adequately informed on their future pensions. it is therefore crucial to provide workers with additional information about their accrued and perspective pension rights, both in the public and in the private pillar. an example of the benefits of transparent and clear information on the individual rights stemming from the public system is offered by the swedish experience, where every year workers receive information on their past contributions and the rates of return granted by the system on such contributions. valuable additional information could include estimates of the final pension benefits under various macroeconomic and demographic scenarios. another issue that deserves closer examination is the potential benefit, in a phase of transition of the public pillar towards a dc system, of expanding the different types of guarantees offered on the performance of pension funds. in the current framework, pension funds are required by