Pension funds in Finland have already switched significant volumes of assets to listed equities from fixed income and other investment classes in anticipation of new rules, and have told IPE they plan to take that asset allocation shift even further in the next months and years.
Kari Vatanen, head of asset allocation and alternatives at the €34bn mutual pensions insurance company Elo, told IPE: “We are planning to increase our allocation to listed equities by 10-15 percentage points over the next 12 months, driven by Finland’s pension reform, which will be implemented in three phases.”
The increase, Vatanen said, would be funded by reducing allocations across all other asset classes.
The first phase of the investment regulation reform for providers of earnings-related pensions in the private sector took effect at the beginning of July, as part of a broader pensions reform aimed at increasing returns for pension funds, therefore reducing the need for higher contributions.
Under the reform to the TyEL scheme, the proportion of equity return risk shared collectively within the system is increasing to 30% from 20%, and solvency parameters are being changed with the upper limit for equity allocation rising to 85% from 65%.
On Friday, reporting financial results for January to June this year, Elo said it had already been preparing for the first phase of the pension reform by improving its solvency position and laying the groundwork for a “controlled increase in investment risk”.
Jonna Ryhänen, chief investment officer, said: “We’ve prepared for the reform systematically by increasing the equity weighting of our investment portfolio,” adding that this had been possible even before the reform thanks to “our good investment returns and strengthened solvency”.
“Equities currently make up an exceptionally large part of our investments, which supports long-term return expectations, “ she noted.
According to the interim report figures, Elo’s equities allocation by market value increased to 60.5% at the end of June from 56.3% at the end of 2025, with the listed equities allocation rising to 42.6% from 37.7%.
Separately, a spokesman for Ilmarinen – one of the two largest pension insurers in Finland with €70bn of pension assets – told IPE: “Due to the Finnish pension reform, allocation to equities has increased and will continue to increase in coming years.”
“This means both listed and non-listed equity investments,” he said.
Yesterday, Ilmarinen published its first-half report, revealing a large increase in its equities weighting in the six-month period.
Annika Ekman, EVP of investments at Ilmarinen, said in the report that pension assets had to continue to be invested “in a productive and safe manner”, but that increased risk-taking led to greater than usual fluctuations in returns on investments.
“At Ilmarinen, we have been carefully preparing for the reform for a long time,” she said.
“We have increased the share of equity investments in the risk distribution of our investments from 54% to 62% during the first half of the year,” she added.
Meanwhile, the Finnish pension foundation of Swedish engineering company Sandvik, Sandvik Eläkesäätiö, told IPE in its response to a survey that it also planned to increase its allocation to listed equities by about three to four percentage points over the next six months, and reduce its allocation to fixed income and real estate funds.
