FINLAND – The largest Finnish pension insurer, Varma-Sampo, sees its average yield rising to 3%-4% higher than inflation – the prediction came as it reported a 1.9% yield on investments in 2002.

“We believe that the company's policy of conscientious risk-taking and its capability in situational assessment will facilitate an increase in the average yield to 3%-4% higher than the rate of inflation,” said Varma-Sampo’s president and chief executive Paavo Pitkanen.

The comments followed the release of the company’s 2002 results, which saw a yield of 1.9% taking the value of its assets to 17.8 billion euros at the end of the year.

“The yield can be considered moderate in the challenging investment markets, but insufficient for a long-term return,”
Pitkanen said.

Varma-Sampo insured around 435,000 individuals’ pension provision at the end of 2002, down 3,000 on the year-earlier figure. Its premiums totalled 2.4 billion euros, while it made 2.4 billion euros in pension payments.

Varma-Sampo said there would be 10,000 more Finns retiring than entering the labour market by 2005. It says this demographic change is already making itself felt in its own operations. “Some 22,700 new pension applications were handled in the year 2002,” it said. “The number of pension estimates grew by 30% and the number of pension decisions by 11% from the year 2001.”

Its solvency was not an issue, it said, despite declining markets. “Despite almost three years of falling stock exchange rates, the company's solvency and risk-bearing capacity remain at a secure level.”

Varma-Sampo was bullish on the pension reform legislation that is going through the Finnish parliament. “The reform will increase people's freedom of choice and encourage them to stay at work longer than is now the case.”

Finland’s planned pension reform has been queried by no less a body than the Organisation for Economic Cooperation and Development. The OECD called it “overly generous” in parts and that there is “uncertainty” over some of the assumed employment rates needed for the reforms to be effective.

Topics