Finnish pension company Ilmarinen returned 3.2 per cent on its investments in the first quarter of 2024, its latest data has revealed.

Ilmarinen stated that the positive return between January and March was driven by the strong performance of its listed equity investments.

However, higher interest rates ‘dampened’ returns on fixed income investments.

The pension company’s return in Q1 amounted to €1.9bn, bringing the total value of its investments up to €60.5bn.

Since 1997, Ilmarinen’s long-term average return was 5.8 per cent, corresponding to an annual real return of 3.8 per cent.

Ilmarinen’s total result rose year-on-year to €778m, with premiums written rising by 2 per cent to €1.69bn and pensions in payment increasing by 8 per cent to €1.89bn.

Its solvency capital increased to €13bn and its solvency ratio improved by 1.2 percentage points to 126.6 per cent.

“We have successfully continued implementing Ilmarinen’s strategy and improved our productivity significantly over the past six years,” said Ilmarinen CEO, Jouko Pölönen.

“Over the past six years, Ilmarinen has successfully reduced the annual costs for managing pension insurance by a third, or close to €50m, for our more than 1.1 million customers.

“At the same time, premiums written have grown 34 per cent. Pensions are part of public social security, and we want to continuously manage them even more effectively.”

The Finnish pension reform is being prepared for January 2025, with the amendments needing to strengthen public finances in the long term by approximately 0.4 percentage points in relation to GDP.

“As the working age population declines, among other things due to a low birth rate, the return on investments will play a greater role in ensuring the financial sustainability of the pension system,” Pölönen added.

“Increasing the return on investments is in fact the most effective way to improve the pension system’s financial and social sustainability. The solvency framework should be reshaped so as to enable pension companies to seek better long-term returns.”

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