Employee pension schemes in Finland will find it hard to achieve their targeted investment returns in the next few years in the current low-interest-rate environment, the country’s financial supervisor has warned.

Releasing data on the financial position and risks of supervised entities, the Financial Supervisory Authority (Finanssivalvonta or FIN-FSA) said the investment return for the employee pension sector was zero in the first half of this year.

“A positive return in the second quarter covered the losses generated in the first quarter,” it said.

“The solvency position of the employee pension sector weakened, but risk-bearing capacity remained strong.”

The investment return for the sector failed to reach the target level in the January-to-June period.

“Likewise, in the coming years, it will be difficult to reach the target level if interest rates remain at their current low level,” the regulator added.

According to FIN-FSA figures, the average solvency ratio for the employee pension sector fell to 26% at the end of June from 28.6% at the end of December 2015.

However, the risk-based solvency position for the sector rose to 2.1 at the end of June from 2.0 at the end of December, the authority said, explaining that the decrease in equity risk in the investment portfolio had been reflected as a decline in the solvency limit.

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