Finnish pension insurance company Ilmarinen reported an 8.9% return on its investments for the first half of the year, and its chief executive officer called for a range of economic measures to shore up the country’s earnings-related pension system.
In its interim report released this morning, Ilmarinen – Finland’s second-largest pension fund – also said its solvency capital had grown to more than €15bn by the end of June, bringing its solvency ratio to 134.6%, up from 130.2% at the end of last year.
Commenting on the country’s earnings-related pension system, in which the firm is one of the main providers, Ilmarinen’s president and CEO Jouko Pölönen said in the report: “A low birth rate, a decline in the number of working-age people and a zero interest rate environment are still creating pressure on pension financing in the longer term”.
The global economy was experiencing strong growth after the coronavirus crisis, he said, and it was important for Finland to benefit from that growth, accelerate investments and open up travel.
But at the same time, Pölönen said, solutions had to be found to close the fiscal sustainability gap, and increase employment and Finland’s competitiveness in the longer term as well.
“Work-based immigration should be made easier and we need to entice skilled labour and foreign students to come to Finland and make sure that they become engaged in working life,” he said.
The Finnish Centre for Pensions’ latest “pension barometer” survey showed that half the Finnish population backed increasing work-based immigration in order to strengthen the financing of the earnings-related pension system, the CEO said.
In financial results for January to June, Ilmarinen reported that the market value of investments had grown to €57.5bn at the end of June from €53.3bn at the end of 2020.
Pölönen cited strong momentum on investment markets in the first half as a factor behind the positive half-year return, and said equity investments had generated the best return in the period at 16.9%.
Fixed income, meanwhile, returned 2.6% and real estate produced a 2.1% return, Ilmarinen reported. The asset category of “other investments”, which includes hedge funds and commodities, and made up 8.7% of the portfolio the end of June, made a 0.5% loss in the six-month period, according to the interim report.
Varma, the other large pension insurance company in the earnings-related pension system, is due to report its first half results on 20 August.