Finland’s financial supervisory authority (FIN-FSA) said today that the occupational pension sector’s capital position was strong at this year’s third quarter, with the overall solvency ratio rising to a record level of 135%, up from the figure for the end of June of 134%.
In a report on the Finnish financial sector’s capital position at the end of September, the authority attributed the bolstered solvency of employee pension providers – pension insurance companies as well as pension funds - to strong investment returns.
Equity investments, it said, accounted for around half of the employee pension sector’s asset allocation overall at the end of September, and that the sector’s average resilience had remained “reasonable” despite high levels of risk taking.
Looking ahead, the FSA commented on the financial sector as a whole, saying: “The risks in the operating environment relate particularly to the COVID-19 pandemic, as insufficient vaccination coverage and new virus variants mean continued uncertainty.”
The authority said year-to-date investment returns for the employee pension sector had risen to 11.3% at the end of September from 9.2% at the end of June.
The broader issue of whether solvency rules for Finnish private-sector occupational pension providers need to change has been under the microscope recently, with the Finnish Centre for Pensions suggesting amending the regulations to allow for a higher level of investment risk.
The four providers that made up the private-sector side of the Finland’s earnings-related pension system reported investment returns of between 8.3% and 13.5% for January to September this year, with the three largest – Ilmarinen, Varma and Elo – seeing strengthened solvency.