FINLAND – The €7.5bn Finnish State Pension Fund, or Valtion Eläkerahasto, returned 8.2% in the first six months of 2005, compared with 4.3% in the 2004 period.

Assets have risen from €6.9bn at the end of last year.

“Equity markets rose substantially in the first half and fixed-income investments also performed well,” said managing director Timo Löyttyniemi.

He cited firms’ strong profits and lower interest rates as a positive impact on the market. “However, continually falling interest rates will make the investment environment more challenging in the future,” he said.

The €4.4bn fixed income portfolio returned 4.7%, against 1.8% last time – driven by lower euro zone interest rates.

The €3bn equities portfolio - 40% of the total - yielded 13.4%, from 9% before. “The rise in share prices was strong during the first half, particularly in Asia and the Nordic countries.”

The fund’s €979m of income consisted of pension contributions and income from investment activities. It had €594m in transfers. The scheme, which was set up in 1990, covers 183,000 employees, with benefits paid to 290,000 people.

The fund is on target to account for 25% of Finland’s state pension liability by 2020. The amended State Pension Fund Act came into force at the start of this year.