The chief executive officer of Finland’s state pension fund VER (Valtion Eläkerahasto) is calling on governments to make it easier for investors to put money into the defence sector, against the background of heightened geopolitical tensions since Russia’s invasion of Ukraine.

In a blog, Timo Löyttyniemi, CEO of the €22.8bn buffer fund for state employee pension expenditure, said: “A global division of states into separate camps is underway, coupled with the rise of the defence industry around the world.

“For Europe and Finland, this transition offers a major opportunity to expand the industrial and technological base,” he said.

Regardless of why this era of confrontation between authoritarian states and the “new West” had come about, the western system was worth defending, and had to be defended, the CEO of the Helsinki-based pension fund wrote.

The defence industry and technology was a sector with new growth potential, he said, adding that the question was how to harness this opportunity.

Timo Löyttyniemi at VER

Timo Löyttyniemi at VER

“We need to lift restrictions, create growth opportunities, generate orders, ensure quick execution and develop new products,” he said.

This would not be easy, the VER chief said, but added that it could be accomplished through the combined efforts of the private and public sector.

“The new situation offers Europe and Finland an opportunity to put the economy on the growth track by producing dual-use products and technologies,” he said, referring to products for both military and civilian use.

Löyttyniemi is adding his voice to other calls from within the European pensions industry to legislators regarding the issue of investing in the defence sector.

In March, following the European Commission’s launch of its European Defence Industrial Strategy, the Danish pensions and insurance lobby said further targeted measures were probably needed in the EU and Denmark to create a greater acceptance and understanding of defence investments.

In the Netherlands, the Dutch Pension Federation responded in February to criticism from the country’s defence minister that Dutch pension funds had not boosted their investments in the defence sector since the outbreak of the war in Ukraine, saying they first needed a long-term investment plan for the defence industry from the government.

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