Contributions are falling at Finland’s two biggest pension insurance companies, who have used their interim reports to highlight concerns about employment in the Nordic country.

Ilmarinen and Varma – the largest of the four pension insurers in the earnings-related pension system – reported January-to-September results today, with both revealing their investment operations had continued to recoup losses suffered earlier this year. 

However, Risto Murto, Varma’s president and chief executive officer, said: “Right now, the most critical issues for the pension system are Finland’s economic growth and the development of employment, not realised investment returns.”

He said 2020 had been a very contradictory year for pension investors so far.

“The real economy and societies around the world are in a deep crisis because of the coronavirus, but the development on the investment markets has been moderate,” he said, adding that this was also reflected in Varma’s investment returns.

Varma’s return remained negative at -2.6% for the nine months to the end of September, although it was narrower than the 5.7% loss reported for the first half of the year. Its total investments were worth €46.8bn at the end of September, down from €48.7bn at the end of 2019.

Ilmarinen reported a 1.1% return on its investment portfolio for January to September, although at €50.3bn the market value of investments was still slightly lower at the end of September than the €50.5bn it had amounted to at the end of last year.

It reported contributions fell to €4bn in the nine-month reporting period from €4.3bn for the same phase in 2019, as a result of an increase in temporary layoffs and a temporary 2.6% discount in the employers’ TyEL contribution.

The firm predicted that in full-year results for 2020, contributions would show a marked year-on-year decline because of growing unemployment and the contribution discount.

Varma’s contributions, or premiums written, fell to €3.7bn in January to September from €4bn in the same period last year.

Ilmarinen’s president and CEO Jouko Pölönen said the fall in employment because of the coronavirus crisis, uncertain economic prospects and the zero interest rate environment were putting pressure on the financing of pensions, and that this would be even more the case in the future because the population in Finland was ageing.

“What is required now is responsible action and close collaboration involving the whole of society in order for us to rein in the pandemic without extensive lockdown measures, which would further exacerbate the economic crisis and unemployment,” he said.

In the longer term, Pölönen said, measures were also needed to improve employment and strengthen Finnish competitiveness.

“It is the only way to secure well-being and the financing of pensions also for future generations,” he said.