Finland’s earnings-related pension providers stepped up their investment risk in the first three months of this year, with both equity risk and exchange rate risk climbing, the country’s financial watchdog reported, while describing solvency positions as good.
FIN-FSA (Finanssivalvonta) said today in its report on the financial sector’s capital position as at 31 March: “The employee pension sector’s solvency ratio improved on the back of return on equities and was 131.9%.”
This compared to 129.1% at the end of December 20202, it said.
“The other investment classes too, developed positively, and the sector’s total return on investment was 5.0%,” the watchdog said, adding: “The sector’s solvency position is good.”
The portion of equities in the sector’s collective investment assets increased, the FSA said, and accounted for nearly half of the total volume of investments at the end of March.
“Reflecting the rise in equity risk and exchange rate risk, the solvency position remained unchanged (1.7), despite the increase in solvency capital,” it said.
The employee or earnings-related pension system includes the four mutual pension insurers Ilmarinen, Varma, Elo and Veritas as well as the public sector pension fund Keva and others.
FIN-FSA said the ratio of the solvency limit – the solvency capital requirement in relation to investment assets – climbed to its highest level since the introduction of the solvency legislation in 2017, to stand at 14.1% on 31 March, up from 12.8% at the end of December.
Meanwhile, the sector’s payroll improved slightly at the end of Q1 from the previous quarter, it said.
At the end of April, Varma reported that a 6% return on investments in the first quarter had lifted its solvency ratio to a record high of 133.5%.
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