Regulatory pressure has forced the small Finnish pension fund Pensions-Alandia to merge with larger player Veritas.

Pensions-Alandia chief executive Åsa Ceder said it had become “virtually impossible” for his firm to develop its service since 2016.

“Changes to the regulations made it virtually impossible for a small company like Pensions-Alandia with five employees to keep up with developments,” he said.

The two pension providers have signed a letter of intent about their link-up plans.

Veritas already has a 10% stake in Pensions-Alandia, which is mostly owned by Alandia Insurance and operates in the Swedish-speaking Ålandia islands, situated in the Gulf of Bothnia.

The two pension companies have had a co-insurance agreement since 1961.

Veritas said the merger would save just under €1m in annual administration costs.

Carl Pettersson, Veritas chief executive, said the upcoming merger was good news for its customers and would strengthen its position as the fourth option on the market.

“The improved cost-effectiveness will have a positive impact on our customer benefits,” he said. “At the same time, it gives us opportunities to further develop our service.”

Veritas would still be the smallest pensions insurance company, but financially very strong, Pettersson added.

“Small and medium-sized companies have needs that differ from the big ones, and they need a smaller pension company that can meet them,” he said.

The joint business will continue under the Veritas brand, and be based in Turku.

If the link-up is approved by both companies’ boards, general meetings and by the authorities, Pension-Alandia customers will become Veritas customers on 1 January 2019.

At the end of 2016 – the latest annual report available on its website – Pensions-Alandia had €275.6m of total assets, while Veritas had €3.2bn of investment assets at the end of 2017.

AI technology ‘can predict ill-health retirement’

Machine learning tests carried out by the Finnish Centre for Pensions have shown that technology can predict (to some extent) which individuals will take early retirement on health grounds.

The artificial intelligence (AI) application could be used identify groups of people at risk of ending their working lives early due to ill health and to plan preventative measures, according to the Finnish Centre for Pensions – the statutory central body of Finland’s earnings-related pension scheme.

In tests, the technology managed to identify four out of five retirees taking a disability pension two years before they had actually done so, the centre said.

Mikko Kautto, director at the organisation, said: “Once it gets easier to combine more extensive datasets, AI will offer improved tools to help identify risk groups and plan preventive methods.”

Jarno Varis, mathematician at the the Finnish Centre for Pensions, said that four out of five was a very encouraging result.

“It is very likely that the accuracy would be improved by adding more social and health data to the algorithm,” he said.

The sample consisted of the centre’s anonymous register data for 500,000 people.

By comparing the data for the people who had retired on a disability pension and those who had not, the algorithm learned to identify the variables that predicted a disability pension, it said.

Factors such as repeated sickness benefits and rehabilitation allowances, as well as a reduced earned income were most successful indicators of a forthcoming disability, the centre said.

“A low educational level, unemployment and being unmarried also contributed to the likelihood of retirement on a disability pension,” Varis said, adding that the factors identified by AI corresponded to the results of previous research.

The research project was carried out in cooperation with Ilkka Huopaniemi of Siili Solutions, with all information processing done on the centre’s own platform.