EUROPE – Finland’s Tapiola Pension saw investment returns bounce back last year, with investments ending 2012 with a 9% profit after a 3% loss in 2011.

But the provider warned that the economic environment remained challenging.

CIO Hanna Hiidenpalo said: “The gradual improvement of the financial markets’ conditions and the return of investor confidence seen in the third quarter continued in the final quarter of the year.”

All asset classes managed by the pension insurance company posted positive returns for the full year.

The company’s solvency ratio grew to 27% by the end of the year compared with 22.3% at the close of 2011.

At the end of 2012, the fair value of investments was €9.7bn, up from €9.05bn the year before, according to the provisional figures for the year.

Equity investments performed more strongly than other asset classes, returning 16.3%.

This included a 30.9% return for private equity and 25.6% return for European equities.

Fixed income ended the year with a 7.4% profit, including a 13.8% return on corporate loans.

Property produced a 4.5% return for the year.

Within this asset class, direct real estate investments made a 5.2% profit, real estate investment funds closed the year with a 1.1% gain and alternative investments made 1.6%.

The second half of 2012 was particularly strong for investment returns.

The pension fund said: “This was largely the result of central banks’ commitment to reflationary monetary policy and the gradual stabilisation of the economy, especially in the US.”

In other news, Danish blue-collar pension scheme Industriens Pension beat its benchmark last year to finish with a 12.9% investment return for 2012.

This compares with an overall benchmark return of 11.2%.

Laila Mortensen, managing director, said: “We are very satisfied with the investment result, but we also have to be honest and say it was difficult to do badly in 2012.”

Equities rose, and both sovereign and credit bonds made good profits, she said.

She said the high return meant a good start for the fund’s new unit-link product, launched last June.

Industriens Pension posted a pre-tax return on sovereign bonds of 7.6% in 2012, higher than the benchmark’s 5.5% profit.

The pension fund has a 26.5% allocation to this asset class.

Foreign shares – which make up 19.1% of the pension fund’s asset allocation – also outperformed the benchmark, posting a 17.7% profit compared with the benchmark’s 15%.

Lastly, Danica Pension reported returns on unit-link pensions of between 9.7% and 16.8% for 2012.

In its Danica Balance unit link product, the higher returns of up to 16.8% were gained by customers with a higher proportion of equities, while those with only a short time to retirement and a low proportion of shares made a 9.7% return.