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Finnish pension funds look increasingly overseas

FINLAND – Pension funds and foundations, both public and private continued to switch investments from cash and loans to equity and overseas investment vehicles during 2000, according to TELA, the country’s Association of Employment Pension Insurers.

Finnish private sector pension funds increased their investment in shares by more than a third, from 32.5% to 45.8% last year, while corporate pension foundations increased their equity exposure from 38.8% to 40% in 2000.

Although official performance figures for Finnish pension institution returns have not been published yet, Esa Swanljung, head of TELA, gave some idea of the results in a speech at a recent pension institution seminar.

Swanljung commented: “The annual report for 2000 of the occupational pension system shows that stock market volatility has not dragged pension funds to negative returns. The real returns of the funds have been over 1% and the nominal returns were significantly higher.”

A shift towards investing abroad continues in the Finnish pensions industry. Last year, private sector pension institutions invested 27.9% (e15.5bn) of their assets within the eurozone, excluding Finland, and 6.6% (e3.7bn) outside the monetary union; compared to 10% (5.3bn) and 4.8% (e2.6bn), respectively, in 1999.

Investments outside Finland consist mainly in exposure to government and corporate bonds: e13.8bn of the overseas total of e15.5bn was invested in bonds, and e5.1bn was invested in equity.

Private sector pension foundations currently have e9bn in assets under administration and private sector pension funds handle some e3.3bn of assets.
Currently, pension insurance companies manage more than half (e38.9bn) of the total pension assets (e70.8bn) in Finland, while the Local Government Pensions Institution (KEVA), is the single biggest public asset holder with a total of e12.2bn under management.

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