Finnish earnings-related pension company, Ilmarinen, made a return of 3.3 per cent in the first nine months of 2023, equivalent to €1.9bn.

Publishing an interim update, Ilmarinen said the drivers of the investment portfolio's 3.3 per cent return were the favourable development of the stock market and interest and credit risk investments.

The rise in interest rates was reflected in real estate investment returns, which turned negative. The long-term average return since 1997 was 5.7 per cent. The market value of the investments was €57.7bn.

Ilmarinen's cost efficiency improved further, as insurance premium income increased by 5 per cent and medical expenses decreased by 2 per cent. Medical expenses were 0.34 percent of the insured's TyEL salary and YEL income. Between January and September, it paid pensions of approximately €5.4bn to 455,000 pensioners.

Net customer acquisition was €135m and the rolling customer retention rate for the previous 12 months was 96.6 per cent. The solvency capital increased to €12bn and the solvency ratio decreased to 125.5 per cent.

Commenting on Finland’s plans to make changes to occupational pensions to ensure long-term sustainability, Ilmarinen said increasing investment returns is an effective way to improve the financial and social sustainability of the pension system.

“For this reason, the best possible long-term return for pension funds must be ensured by developing solvency regulation. The current solvency regulation is short-sighted, complex, and guides you to invest cyclically. Consequently, the very long investment horizon of pension funds cannot be used in investment activities,” Ilmarinen CEO, Jouko Pölönen, argued.

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