Finland Investment and Pensions

The Finnish pension system is challenged by an ageing population, and unlike many other developed economies, pension provision in Finland relies mainly on a single pillar – the earnings-related pension system. Provision of this part-funded component of the first pillar is dominated by the four pension insurance companies Varma, Ilmarinen, Elo and Veritas for workers in the private-sector. The pension insurance companies are not IORPs under EU law – as agreed in 1995 when Finland joined the bloc. Finland’s largest pension fund, the €76bn Keva, manages local government pensions while VER is the buffer fund for the state’s occupational pensions obligations. Pensions reform legislation taking effect in 2026 will allow the four pension insurers to take on more investment risk by increasing equity allocations in pursuit of higher returns. That reform was initiated three years ago by the Petteri Orpo’s government to bolster public finances. Further reform is afoot for self-employment pensions, potentially giving entrepreneurs freedom to choose the basis determining their contributions.