Finnish occupational schemes return 6.1% in nine months – TELA

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Pension schemes in Finland’s earnings-related pensions sector returned an average of 6.1% on their assets over the first three quarters of this year as equity allocations grew.

Finnish pensions alliance TELA reported data showing assets in the sector grew to €172bn by the end of September, up by €2.5bn, returning a nominal 6.1% since the start of the year. 

In its investment analysis, the alliance showed pension funds’ share of equities had increased over the period, while fixed income and real estate investments had fallen.

At the end of September, the overall allocation to equities and equity-type investments was 48.1%, with 42% in fixed income and 9.9% in property. 

Maria Rissanen, analyst at TELA, said: “Despite the economic uncertainty during the past year, the returns have so far been quite good.”

Return sources came from many different sources throughout the year, she said. 

Geographically, the occupational pension schemes invested more in Finland than in the rest of the euro area, with €45.6bn invested domestically in the nine months to the end of September and €43.5bn elsewhere in the single-currency zone, TELA said.  

Over the last 10 years, domestic investments had increased by around €20bn, it said.

Rissanen said earnings-related pension funds had won their highest returns in the period from equity investments, and from private equity in particular.

“In the current investment environment, it is difficult to get much return from fixed income investments,” she said.

TELA said there had been no significant increase in pension insurers granting loans to companies, in spite of the economic situation. 

Rissanen said it seemed the availability of finance was not a major problem for Finnish companies. 

“Companies are getting competitive funding from sources other than pension insurance companies,” she said.

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