The market value-weighted return on investments by the State Pension Fund of Finland (VER) reached 9 per cent in 2024, an increase of 1.3 per cent from 2023.

The real rate of return was 8.2 per cent, up from 4.0 per cent the year before.

VER primarily seeks a long-term return sufficient to finance the state pension system. Its average nominal rate of return over the past ten years has been 5.5 per cent, and its real return is 3.4 per cent.

The market value of the fund's assets was €24.2bn at the end of 2024, an increase from 22.8bn in 2023.

Of all the investments, fixed-income instruments accounted for 41 per cent, equities 52.7 per cent, and other investments 8 per cent. The rest of the effect of risk-adjusted allocation was due to derivatives.

"2024 was a good year for investments," said VER CEO Timo Löyttyniemi.

"Nearly all asset classes generated better-than-expected long-term returns. US equities generated the best returns. The weakest performers were real estate investment trusts.

"The state of the economy and monetary policy contributed to a sound investment market performance. The expectations regarding economic growth remained positive, creating a basis for favourable stock market performance. However, the geopolitical situation continues deteriorating and creating uncertainty," he added.

At the end of 2024, the pension liabilities incurred by the state pension system amounted to €101.0bn, with an estimated funding ratio of 24.2 per cent.

In 2024, VER received approximately €1.7bn in pension contribution income and transferred some €2.3bn to the government budget.

In the same year, VER was required to contribute an amount equivalent to 41 per cent of the state's annual pension expenditure to the government budget. The amounts to be transferred will continue to increase with the growing pension expenditure.

VER's negative net transfer to the government budget, meaning the difference between the pension contribution income and the transfer to the government budget, will increase due to the amendments to the VER Act and rising pension expenditure, according to Löyttyniemi.

"The negative net transfer was 2 per cent of the fund's assets, but it is expected to increase to 4–5 per cent in the coming years. These factors will limit the fund's growth in the next few years," he stated.

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