The State Pension Fund of Finland (VER) has reported an investment return of 14.6 per cent in 2021.

Publishing its full-year results, VER said the market value-weighted return on the investments reached 14.6 per cent in 2021 (4.0 per cent in 2020). The real rate of return was 10.8 per cent (3.8 per cent).

VER primarily seeks a long-term return sufficient to finance the state pension system. VER’s average nominal rate of return over the past ten years is 7.1 per cent and real return 5.9 per cent. The average nominal five-year return is 6.9 per cent and real return 5.6 per cent.

At the end of 2021, the market value of the fund’s assets amounted to €23.6bn (€21bn in 2020). Of all the investments, fixed-income instruments accounted for 37.9 per cent and equities 49.5 per cent, while the rest consisted of other investments and the impact of derivatives.

Of the large asset classes, listed equities generated a return of 24.2 per cent and liquid fixed-income instruments 0.7 per cent. Of the other asset classes, the best performance was put in by unlisted equities at 57.9 per cent, private equity funds at 47.7 per cent and infrastructure funds at 14.9 per cent.

“The return on investments was excellent in 2021. Equities and non-liquid investments in particular generated outstanding returns while the other asset classes also put in a positive performance,” VER CEO, Timo Löyttyniemi, said.

“Covid-19 hampered the return to normalcy, but the support measures undertaken by governments and central banks helped create favourable conditions for the economy and investments,” Löyttyniemi added.

“VER’s real returns have remained sound for a long period of time, which has clearly consolidated the financial base for future pensions. At the same time, we’ve achieved the target funding ratio of 25 per cent laid down by the Act on the State Pension Fund, the ratio now being 25.4 per cent. The government proposal for amending the Act to increase VER’s transfers to the government budget is already before Parliament.”

In 2021, the VER received approximately €1.5bn in pension contribution income and transferred some €1.9bn to the government budget. Every year, VER contributes an amount equivalent to 40 per cent of the state’s total pension expenditure to the government’s annual budget. The amounts to be transferred will continue to increase with the growing pension expenditure.

At the end of 2021, the pension liabilities under the state pension system were €93.3bn. The funding ratio was 25.4 per cent. The Financial Statements will be confirmed by the Ministry of Finance in April 2022.

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