The return on investments of the State Pension Fund of Finland was 14.6% in 2021 and ten-year average return 7.1%

Press release 28 February 2022

The market value weighted return on the investments by the State Pension Fund of Finland (VER) reached 14.6 per cent in 2021 (4.0 per cent in 2020). The real rate of return was 10.8 per cent (3.8 per cent). 

VER primarily seeks a long-term return sufficient to finance the state pension system. VER’s average nominal rate of return over the past ten years is 7.1 per cent and real return 5.9 per cent. The average nominal five-year return is 6.9 per cent and real return 5.6 per cent.

At the end of 2021, the market value of the Fund’s assets amounted to EUR 23.6 billion (EUR 21.0 billion in 2020). Of all the investments, fixed income instruments accounted for 37.9 per cent and equities 49.5 per cent, while the rest consisted of other investments and the impact of derivatives.

Of the large asset classes, listed equities generated a return of 24.2 per cent and liquid fixed income instruments 0.7 per cent. Of the other asset classes, the best performance was put in by unlisted equities at 57.9 per cent, private equity funds at 47.7 per cent and infrastructure funds at 14.9 per cent.

“The return on investments was excellent in 2021. Equities and non-liquid investments in particular generated outstanding returns while the other asset classes also put in a positive performance,” says CEO Timo Löyttyniemi.

“Covid-19 hampered the return to normalcy, but the support measures undertaken by governments and central banks helped create favourable conditions for the economy and investments,” Löyttyniemi adds.

“VER’s real returns have remained sound for a long period of time, which has clearly consolidated the financial base for future pensions. At the same time, we’ve achieved the target funding ratio of 25 per cent laid down by the Act on the State Pension Fund, the ratio now being 25.4 per cent. The government proposal for amending the Act to increase VER’s transfers to the government budget is already before Parliament,” Löyttyniemi says.

In 2021, the VER received approximately EUR 1.5 billion in pension contribution income and transferred some EUR 1.9 billion to the government budget. Every year, VER contributes an amount equivalent to 40 per cent of the State’s total pension expenditure to the government’s annual budget. The amounts to be transferred will continue to increase with the growing pension expenditure.

At the end of 2021, the pension liabilities under the state pension system were EUR 93.3 billion. The funding ratio was 25.4%. The Financial Statements will be confirmed by the Ministry of Finance in April 2022.

VER’s Annual Report is available here.

Additional information: VER’s CEO Timo Löyttyniemi, firstname.lastname@ver.fi, tel.: +358 (0)295 201 210.

Established in 1990, the State Pension Fund (VER) is an off-budget fund through which the state prepares to finance future pensions and equalise pension expenditure. VER is an investment organisation responsible for investing the State’s pension assets professionally. At the end of 2021, the market value of the Fund’s investment portfolio stood at EUR 23.6 billion.