Finnish public sector pension provider Keva, responsible for the funding of local government and wellbeing services county pensions and the investment of pension funds, reported a total return on investments of 10.4 per cent (€6.7bn) in 2024.

The provider said that the best performing assets in 2024 were listed equities, which generated a return of 14.2 per cent, followed by hedge funds with a return of 12.7 per cent and private equity investments with a return of 10 per cent.

In addition to this, fixed-income investments generated a return of 6.8 per cent, while real estate investments returned 1.8 per cent.

Keva’s investment assets market value totalled €71.5bn at the end of 2024.

Listed equities accounted for 40 per cent of this, 29.3 per cent were fixed-income investments, 19.8 per cent were private equity investments (including unlisted equities), 6.9 per cent were hedge fund investments and 6.7 per cent were real estate investments of risk-based allocation. Derivatives had an impact of -2.7 per cent on risk-based allocation.

Keva CEO, Jaakko Kiander, said: “Excellent investment performance resulted in an increase in the funding rate of the pensions for which we are responsible, besides which there was an improvement in the cost efficiency depicting our operations. Keva celebrated its 60th anniversary in high spirits.”

Adding to this, Keva CIO, Ari Huotari, said that market attention in 2024 was largely focused on central bank rate cuts and expectations of such cuts.

“Economic performance was subdued in Europe but much stronger in the US, whereas there are mixed expectations for 2025,” he said.

“Equities saw another strong year in 2024, but going forward, geopolitical concerns and possible actions by the new US administration are casting a shadow over capital markets.”

The update also showed that the provider’s long-term return on investments was at a "good" level in 2024.

Over the longer term, the cumulative, capital-weighted real return on investments since funding began in 1988 to the end of 2024 was 3.9 per cent a year.

The average real return, excluding capital weighting, over the same period was 5 per cent. The real return, excluding capital weighting, over the past five years has been 2.4 per cent, and the 10-year real return is 3.7 per cent.

In addition to this, the update revealed that the sum of wages and salaries of Keva member organisations – towns and cities, municipalities, joint municipal authorities, municipal limited liability companies, and wellbeing services counties – was €22.9bn, an increase of 5 per cent compared to 2023.

Meanwhile, a total of €6.4bn in contribution income accrued, and the provider paid out €7.3bn in local government and wellbeing services county pensions. It said the gap between contribution income and pension expenditure was met out of investment income.

Keva is also responsible for the state, church, the Social Insurance Institution of Finland (Kela), and Bank of Finland pensions. 

In 2024, Keva paid pensions totalling €6bn to the state, Evangelical Lutheran Church, Kela, and Bank of Finland personnel.

The state, Evangelical Lutheran Church, Kela, and Bank of Finland pay their own pensions, and Keva’s investment assets are used solely to cover local government and wellbeing services county pensions.

According to the update, the provider received 3 per cent more pension applications than in 2023, while partial early old-age pension applications rose by around 3,600 (49 per cent) to around 10,900. These figures slightly exceeded the peak figures seen in 2022.

Meanwhile, old-age and survivor pension applications were down 3 to 6 per cent in 2024.

Keva said that the number of applications for disability pensions, both full and partial disability pensions, remained mainly unchanged compared to the previous year.

However, vocational rehabilitation applications were down 6 per cent in 2024 compared to 2023, with a particularly “sharp” fall in rehabilitation plan applications.

The provider said that rehabilitation applications have been on a downward trajectory for many years now, as around 5,500 rehabilitation applications were received in 2024, whereas there were more than 8,100 in 2018.

The results also showed that in 2024, it was reported that 65 per cent of the pension applications submitted in 2023 were completed online through the Keva My Pension service.

Additionally, around 8 per cent of applications were submitted electronically through other Keva channels.

In 2024, the provider processed old-age pensions in three days and disability pensions in 30 days, on average, with partial early old-age pensions processed fastest, with decisions issued in, on average, two days.

The provider’s annual results also found that survivors’ pensions took an average of six days to process, and rehabilitation decisions took around 18 days. Old-age, disability, and survivors’ pensions were processed an average of two to five days faster than in private institutions.

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