Assets within the Finnish earnings-related pension system will reach €650bn (adjusted for inflation) by 2090, the Finnish Centre for Pensions has calculated.

In a report that looks at the long-term development of average pension contributions and pension assets for the whole earnings-related pension system until 2090, ETK concluded that the outlook is “rather favourable”.

“According to the projections of the Finnish Centre for Pensions, pension assets will grow moderately in the coming decades. Growth will accelerate in the 2040s, after which pension assets will grow faster than the payroll. By 2090, the ratio of expenditure to insured payroll will rise to around 364 per cent. In the same year, the amount of pension assets will rise to around €650bn (adjusted for inflation),” the report stated.

ETK senior mathematician, Kaarlo Reipas, said that the “course of the earnings-related pension system is slowly turning”, with the changes in the direction of the system being “relatively predictable”, at least for the next few decades.

“The pension expenditure of municipalities and wellbeing services counties is not expected to increase significantly in the future. The current level of contributions appears to be sustainable well into the future. State pension expenditure will remain high for a few more years but will start to decline in the 2030s. Much depends on how the return on pension assets and the birth rate develop,” Reipas explained.

By the end of 2021, annual earnings-related pension assets amounted to 850 per cent of pension expenditure. According to projections by the Finnish Centre for Pensions, the ratio will continue to rise over the next 30 years and eventually stabilise at around 1,000 per cent. This corresponds to about 10 years of pension expenditure.

According to projections by ETK, the system’s average pension contribution will rise from around 25 per cent today to 26 per cent by 2090. The ratio of state funding to insured payroll will decline over the same period.

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