The assets of Finnish earnings-related pensions were boosted by the performance of listed equities in the first half (H1) of 2024 despite a “sluggish” Finnish economy, according to data from the Finnish Pension Alliance (Tela).

Over H1, assets increased by €10bn but the majority of this growth was in the first quarter, as figures for the second quarter revealed that assets grew by around €3bn. At the end of Q2, total assets amounted to €261bn.

Commenting, Tela analyst, Kimmo Koivurinne, said: “The appreciation of assets in the first six months of 2024 was largely thanks to listed equities. In addition to equity investments, alternative investments performed relatively well. Stabilised inflation and expectations of interest-rate cuts supported market positivity.”

The nominal yield on earnings-related pension assets in the first half of the year was 5.2 per cent. The real yield, adjusted to remove the effects of inflation on total return, was 4.6 per cent, according to Tela’s statistics.

Although the value of pension assets reached a record high in H1, public discussion has raised concerns about the weak yields of Finnish equity investments.

“In recent years, the Helsinki exchange has performed relatively weakly compared to European or North American equities, for example. However, diversification is at the heart of earnings-related pension investment strategies, and it will continue to play an important role, both geographically and in terms of asset class. Diversification allows us to aim for yields that are at least reasonable, even if there are large market fluctuations somewhere in the world,” Koivurinne said.

Of the total assets, around 20 per cent is invested in Finland, just under 17 per cent in the rest of the Eurozone, and just under 64 per cent outside it. Equity and stock-type investments account for 57 per cent (€149bn) of the entire €261bn in assets. Of these, 15 per cent are invested in Finland, 15 per cent elsewhere in the Eurozone and 70 per cent outside it.

The proportion of Finnish equity investments has halved in two decades. In 2004, the share of Finnish equities in earnings-related pension assets was around 30 per cent. Around 20 per cent were elsewhere in the Eurozone and 50 per cent outside the Eurozone.

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