Finnish pension assets fly overseas
FINLAND – Pension insurance companies and the employment pension funds for short-term contract workers (LEL) and seamen (SPF) are switching investment allocations abroad at an increasing pace.
In the last quarter of 2000, 40% or FIM103bn, (e17bn) of Finnish assets were invested abroad, compared to 16% (FIM38bn) a year before.
At the same time total investments in Finland rose from FIM238bn to FIM256bn.
A third of the total assets (FIM85bn) were invested within Euroland and 7% (FIM19bn) of the total assets outside it.
More than three quarters (77%) of the investment abroad was into bonds, mainly in EMU countries.
Direct and indirect equity investments outside Finland amounted to a total of FIM23bn - ten billion more than in 1999, with 37% of the overall exposure in shares.
" The growth in employment pension fund investment has happened abroad this year," says Esa Swanljung, managing director of the Finnish association of employment pension insurers (TELA). " It looks like equity investments outside Finland have retained their price. The fall in returns has happened in Finnish stocks," he adds.
Investment in bonds rose to FIM130bn (50.8% of the total FIM256bn) in 2000, an annual rise of FIM20bn, yet there was a drop of FIM35bn in domestic exposure.
Traditionally, bond exposure has been almost exclusively in government paper, but last year saw the rise of corporate bond exposure to 8%.
" Finnish national debt is in decline, so the state doesn’t need the money. Pension institutions, however, still have had a need to invest in bonds, so they’ve looked for currency risk protected eurobonds outside Finland," says Swanljung.