Finnish pension funds made strong returns from domestic equities last year, but their latest annual reports reveal a picture of declining allocations to Finnish investments over the last few years, amid exhortations by local politicians for more home-turf investment.
On Friday, pension insurance companies Ilmarinen and Elo reported annual results; their peers Varma and Veritas presented theirs earlier in the week.
Ilmarinen posted an 8.1% annual return, beating its nearest rival Varma’s 7.5%, and Elo reported a 7.4% return for 2025. Although the smallest of the four, Veritas turned out to have been the winner with its 8.7% gain.
Elo said it made a 17.2% return on its listed equity portfolio, with Finnish stock markets having been “one of the best markets in 2025,” according to deputy CEO Jonna Ryhänen.
Varma said its Finnish listed equities returned 36.2% in 2025, albeit after a gain of just 0.2% the year before.
In its annual results statement, Elo emphasised its commitment to local investment, with Ryhänen saying: “We continued our determined, more than decade-long focus on domestic investments, and in 2025 made investments totalling over €100m in Finnish growth companies”.
However, figures in the pension insurer’s annual report showed that overall, Elo’s allocation to domestic investments was 23% in 2025, down from 26% in 2022 and 25% in 2021.
Domestic allocations flux
Ilmarinen’s, Varma’s and Veritas’ overall weightings to Finnish assets in 2025 all show those percentages have declined since 2020.
The pension sector in Finland has come under particular pressure over the last year from politicians to help domestic economic growth by investing locally, with pensions lobby group TELA having pushed back on this, saying the institutions must heed the goal of keeping the pension system sustainable.
Asked why the overall home allocation had declined over the last few years, Ryhänen told IPE: “The lower allocation to Finland is mainly due to the fact that although we have continued to invest in Finland, a larger share of new investments has nevertheless been made across other geographical regions.”
“The allocation to Finland has also declined because Elo has a significant amount of real estate investments in Finland, whose market performance has been weak compared to other asset classes,” she said.
Elo’s fixed income portfolio was also smaller nowadays, so the amount of Finnish fixed income had also decreased, Ryhänen said.
“Investments in Finland will increase if they are attractive in terms of returns and risk. We will continue to invest in Finnish growth companies,” the deputy CEO said.
Ilmarinen said its investments in Finland totalled €13.6bn at the end of 2025, or 20% of the investment portfolio. However back in 2020, domestic investments made up 25% of pension assets managed by the institution, according to Ilmarinen’s annual report for that year.
Annika Ekman, Ilmarinen’s CIO, said on Friday: “As a pension insurance company, it is our duty to invest in a profitable, secure and responsible manner,” adding that long-term investment in Finland and growth companies was part of the work Ilmarinen did to secure pensions and build sustainable economic growth.
“Finland is our domestic market. This home field advantage allows us to closely monitor different projects and gives us a good perspective on domestic opportunities,” she said.
“We examine domestic investments carefully and actively invest through funds and directly in unlisted companies,” she said.
