Finnish pension company Varma returned 6 per cent on its investments in 2023, its annual financial statement has revealed.

This represents a year-on-year improvement of 10.9 percentage points compared to the return of -4.9 per cent in 2022.

The value of Varma’s investments rose by €2.9bn over the year to €59.1bn.

Listed equities performed the best of Varma’s investments, with a return of 10.3 per cent, while its return on all equity investments was 8.6 per cent.

Varma’s return on fixed income investments was 5.6 per cent and its return on hedge funds was 6.1 per cent.

Real estate investments were the only asset class that posted a negative return, with -4.3 per cent.

The pension company’s solvency ratio fell by 0.1 percentage points to 130.4 per cent, while its solvency capital declined from 1.8 times to 1.6 times in relation to the solvency limit.

In 2023, Varma's contribution income was €6.5bn, and the company paid out €7.1bn in pensions.

“In terms of Varma's investments, the year was good, but the returns came especially from outside Finland,” commented Varma CEO, Risto Murto.

“In Finland, the economic situation and stock market development were sluggish. The increased interest rate clearly slowed down the economy.

“The situation in Finland is weaker than the international economy. The investments of the green transition brought positive expectations to the domestic economy, but the increased interest rate and the competition for government subsidies between different countries have clearly hindered the progress of the projects.

“Now we have to hope that the real drop in interest rates will also revive the projects.”

Varma director responsible for investments, Markus Aho, added: “When the rise in interest rates subsided in the late autumn, returns on stocks turned to strong growth.

“At the end of the year, we increased the share weight in the investment portfolio. In an unstable environment, there were a few bumps along the way, but as a whole, the year was upbeat in terms of investment returns.

“From the point of view of the investment market, the mood is more positive than in the real economy.

“Predictions about the global economy drifting into recession have been constantly pushed forward, and there is still no significant threat of recession in the international economy in the light of the figures.

“After inflation and the rise in interest rates levelled off, economic growth has slowed down, but for the time being it is at a stable level. However, the geographical differences are significant and the geopolitical risks are high.”

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