Competitiveness among the four Finnish earnings-related pension providers has increased their efficiency, according to Finnish Pension Alliance (Tela) chief economist, Mikko Mäkinen.

In a blog post, Mäkinen argued that although there is no product competition between the employment pension companies, due to the coverage provided by employers’ pension insurance (TyEL) insurance being uniform, competition arises indirectly.

This is demonstrated through operational efficiency, investment management, customer bonuses and customer service, such as advisory services, digital solutions and workplace wellbeing initiatives.

Mäkinen cited Finnish pension transfer data as one way to measure this competition, noting that the number of transfers has increased in recent years.

Between 2017 and 2022, 5.6 per cent of TyEL insurance policies were transferred on average, whereas between 2023 and 2025 this figure increased to 7.8 per cent.

In 2025, the proportion of transfers rose to a record high of 8.6 per cent and according to the latest statistics for January to March 2026, 2.3 per cent of the TyEL insurance portfolio transferred.

“These transfers reflect employer-clients’ assessments of a company’s service quality, operational efficiency, cost-effectiveness, and the level of client benefits. Thus, transfers of TyEL insurance policies serve as an indicator of the direction of competition,” he explained.

He added that even the possibility that customers could switch to another company creates competitive pressure for the companies.

“Employers can switch providers periodically if they are dissatisfied with the current service and premium levels. The transfer of insurance policies from one provider to another is referred to as portability. An increase in portability can be interpreted as a sign of intensifying competition,” he said.

Regarding operational efficiency, Mäkinen explained that one way to assess this is to examine the ratio of operating expenses reported in the income statements of employment pension companies to the total insured TyEL payroll and YEL earned income.

“If a company’s operating expenses decrease relative to the size of its workforce (total payroll + revenue), this indicates improved efficiency. A declining cost ratio over the long term suggests that companies have succeeded in streamlining their processes, developing their systems, and optimising their operations,” he stated.

It’s a trend he described as being “clearly evident” as the cost ratio has dropped from 0.5 per cent between 2013 and 2017 to 0.28 per cent between 2023 and 2025.

“The downward trend is significant and reflects improved operational efficiency among companies. With regard to 2025, it should be noted that the figures include only the three pension insurance companies that have already published their financial statements,” he stated.

Overall, he concluded that despite the challenges of assessing competition among pension companies, it has not been “detrimental” to the pension system.

“Competition among employment pension companies thus arises from comparability and relative efficiency: companies must keep costs under control, ensure service quality, and make sure they stand up to comparison with their competitors.

"Furthermore, competition has a clear link to the employment pension contributions paid by employer-clients.

“It is precisely this dynamic of mutual competition that appears to have been one of the factors contributing to the increased efficiency of occupational pension companies in recent years,” he stated.

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