The impact of inflation on pension investors’ real returns is “significant”, according to the Finnish Centre for Pensions (ETK), as Dutch pension funds “lagged” Finnish funds in terms of real returns in 2024 due to higher inflation in the Netherlands.

ETK’s annual investment comparison, which compared 24 pension investors across nine countries, found that the average nominal return was 9.5 per cent last year, while the real return was 8 per cent.

“Despite the recent trade wars that have shaken global stock markets, many pension investors have actually had an exceptionally good investment year. Last year’s return was well above long-term figures,” ETK liaison manager, Mika Vidlund, said.

However, he highlighted that despite inflation falling in many countries, it has affected the results of the comparison in different ways.

“For example, inflation in the Netherlands was much higher than in Finland. As a result, Dutch investors lagged significantly behind Finnish investors in terms of real returns, even though nominal returns are very similar,” he said.

Overall, in the category of regulated investors, Finnish pension investors took all the top spots. Varma achieved the highest real return of more than 9 per cent, while Ilmarinen, Elo and Veritas followed closely with real returns of just under 8 per cent.

Behind the Finnish pension investors were the Swedish occupational pension managers AMF and Alecta and the Danish funds IP and ATP.

ETK attributed Finnish pension investors’ strong performance to an increased allocation to foreign equities in their portfolios, while reducing their share of domestic stocks. ETK special adviser, Antti Mielonen, said that investing abroad had “paid off” as the Helsinki Stock Exchange underperformed other markets.

Among unregulated pension investors, Norway’s Government Pension Fund Global (GPFG) buffer fund achieved the highest real return of 20 per cent.

“GPFG’s return was mainly generated by equities, especially US technology companies. In addition, the continued depreciation of the Norwegian krone provided SPU with additional gains,” Mielonen stated.

The GPFG was followed by South Korea’s statutory pension fund, which secured second place with a real return of almost 13 per cent. Among Finnish investors not subject to regulatory constraints, Keva returned 9.6 per cent and VER 8.2 per cent.

”Keva’s return was so strong that even Swedish buffer funds could not match it,” Mielonen said.

Looking over the longer term, over a 10-year period (2015–2024), the average real return for pension investors is around 4 per cent. Over a 15-year period (2010–2024), the average real return rises to 5 per cent.

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