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Finnish roundup: High demand for new partial pension

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Finland’s two biggest pension insurance companies, Varma and Ilmarinen, have reported strong demand at the beginning of this year for the new partial old-age pension.

Releasing financial results for the first quarter of the year, Ilmarinen said the new option “raised much interest among Ilmarinen’s customers”.

During the first quarter, the company said it received 1,300 applications and made 1,140 decisions about the new type of pension.

Meanwhile, Varma said it had granted the partial early old-age pension to 870 people in the three-month period, having received 1,023 applications.

Of the applicants, 79% were wage-earners and 21% were entrepreneurs. A fifth of the applicants were unemployed, it reported.

Risto Murto, Varma’s president and chief executive, said the new type of pension brought greater flexibility to retirement, but at the same time underscored the individual’s responsibility for their pension cover.

Ilmarinen posted a 2.2% investment return for the first quarter, compared to the 1.4% loss it made in same period last year. 

Timo Ritakallio, the firm’s president and chief executive, said: “The good investment result was attributed especially to the rise in share prices.”

But the company warned that returns in near future were likely to be lower than actual long-term returns, because of a combination of low interest rates and high equity valuations.

At the end of March, the market value of Ilmarinen’s portfolio stood at €38.3bn, up from €35.8bn at the same point last year.

Varma’s portfolio gained 2.7% in the first quarter, compared to a loss of 1.4% in the same period in 2016. The portfolio was worth €44.4bn at the end of the period, up from €41.1bn 12 months earlier. Solvency capital grew to €10.8bn from €10.2bn at the very start of the year.

Equities generated the strongest return, but all asset classes yielded positive returns, the insurer said.

Separately, Etera Mutual Pension Insurance Company made a 2.2% return in the first quarter on its investments, compared to the slim 0.1% return it generated in the same period last year.

Stefan Björkman, chief executive of the company, said: “In spite of political uncertainties, the year got off to a good start in terms of investments both globally and in Finland.”

Equity investments generated a 4.5% return, and within this category, listed equities returned 5.8%. Fixed-income investments produced 1.3% in returns and real estate investments made 1.6%, Etera reported.

Its investment portfolio was worth €6.27bn at the end of March, up from €5.76bn ayear earlier. Etera said its solvency capital rose to €901m from €846m at the end of December.

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