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This paper focuses on whether it is appropriate in Italy to introduce increased tax benefits to the rate of return of contributions made into supplementary pension funds.We will review the role of private pensions in the pension system known as the “three–pillar system” and the pension system known as notional defined contribution (NDC) system. Afterwards we will outline the reasons for, and presumed effectiveness of, tax incentives, based on various theories including the traditional life cycle hypothesis, the altruistic or precautionary saving theory and the behavioural approach.These three theories are compared using the results of numerous empirical studies. In conclusion we will stress that, especially in public NDC systems (as in Italy), the private pillar cannot develop on the lines of the dominating theory, deemed optimal. However, tax incentives alone cannot make up for the lack of optimality. Referring to the behavioural approach, we will highlight the potential effectiveness of widespread dissemination of information on the characteristics of private pension accumulation instruments and the public manager’s crucial role as supporter and guarantor in this respect. The Geneva Papers on Risk and Insurance (2002) 27, 555–570. doi:10.1111/1468-0440.00191