Finnish earnings-related pension funds made returns on investments of 4.4% on average in the first half of this year – up from 2.3% in the same period last year – and total assets across providers rose by €3.7bn in the second quarter to stand at €169.2bn at the end of June, according to Finnish pensions alliance TELA.

In an analysis of first-half figures reported by providers in the sector, TELA, which represents occupational pension providers in Finland, said that during the period the financial markets had been affected by a number of uncertainties, tentative growth and geopolitical crises.

Within this context, Finnish occupational pension providers were successful with their investment strategies, TELA said.

Maria Rissanen, an analyst at the alliance, said: “Equity markets in North America have risen more than European equity markets, and there is a clear difference between the expected economic growth in these two regions.”

By the end of June, according to recently reported figures from the pension providers, allocations to equities and equity-like investments was 47.1%, and fixed income allocations stood at an average of 42.5%. 

These allocations have changed from 43.9% and 45.3%, respectively, at the end of June 2013.

Property investments accounted for 10.4% at the end of June 2014, down from 10.8% 12 months earlier.

Rissanen predicted that the role of returns in the financing of pensions would gradually increase over the next few decades due to the rise in pension expenditure.

Meanwhile, in its interim report, Finnish insurance company Fennia said a high level of solvency had allowed it to take more risk with investments in its life and pensions unit in the first half, for the sake of boosting returns.

Seppo Rinta, chief executive at Fennia Liv, said: “Our pensions business is continuing to grow. The company’s good solvency position made it possible to undertake result-oriented risk-taking in our investment.”

Premium income rose to €67m in the January-to-June period from €49m.

The net return on investments was 4.1%, compared with 5.2% for the whole of 2013.

At the end of June, assets under management increased to €705m from €693m at the end of 2013.

Solvency capital grew to €156m from €137m at the end of December, and the solvency level rose to 23.5% from 21%.

In other news, Finland’s State Pension Fund, VER, reported an investment return of 4.8% in the first half, up from 0.6% in the same period last year, with fixed income investments reversing their year-earlier losses.

The total value of investments rose to €17.1bn at the end of June from €16.3bn at the end of December.

VER’s managing director Timo Löyttyniemi said the world’s economic development had been unstable and vulnerable for some time.

“Expectations are high that the US will boost the rest of the world towards an improved situation,” he said.

Fixed income investments returned 3.6% in the first half, bouncing back from a 2% loss in the first half of 2013 and a 1.6% loss for the whole of 2013.

Equities, meanwhile, returned 6.8%, up from 4.3% in the first half of last year.

The category of ‘other investments’ returned 2.8% in the first half, compared with 1.6% in the same period in 2013.

In this asset segment, private equity returns produced the best returns, benefiting from a strong stock market, while property funds were helped by the continued positive trend in the real estate markets.

Allocations to the different asset classes were broadly stable at 51.8% to fixed income, 39.5% to equities and 8.6% to ‘other’ investments at the end of June, with these allocations having changed by less than 0.5 percentage points each since the end of December.

Topics