Press Release 26.10.2012

Press release, 26.10.12

8.9 per cent return on investment for the State Pension Fund (VER).

The return on investment of the State Pension Fund (VER) for the period from 1 January to 30 September 2012 was 8.9 per cent. The corresponding figure for the whole of 2011 was -2.3 per cent. The geometric mean of VER’s five-year return was 2.7 per cent, while the geometric mean for VER’s ten-year return was 6.0 per cent.

The market value of VER’s investments was 15.0 billion euros at the end of September (13.7 billion euros on 31.12.11). VER investments comprised fixed income investments of 55.0 (56.6) per cent, equities of 38.2 (36.4) per cent, and other investments of 6.8 (6.9) per cent.

The return of fixed-income investments was 7.0 per cent and the return of stock investments was 13.1 per cent. Other investments reached a 1.9 per cent return.

VER’s investment returns for the beginning of the year were on a good level. The measures of central banks have calmed the investment market and kept interest rates low. This has created an environment, where nearly all asset classes have yielded good returns. Investors are concerned about the low interest rates and minimal economic growth in the future, says Timo Löyttyniemi, Managing Director.

The estimated pension contribution return for the period January to September 2012 is approximately 1.2 billion euros, which corresponds to the figures for 2011.

A total of 1.2 billion euros of VER assets had been transferred to the State budget by the end of September. The corresponding figure for 2011 was also 1.2 billion euros.

Market situation

Prospects for the global economy brightened during the first months of 2012. The Eurozone debt crisis also breathed a sigh of relief in the beginning of the year. This was thanks to the ECB’s two massive financing projects, in which it brought over a trillion euros in three-year investments to the market with an interest of 1 per cent. However, hopefulness for developments in the near future faded in the spring and economic growth remained weak in the fall. In its September meeting, the ECB announced that it would begin purchasing short-term government loans of problem countries from the secondary market on the condition that the countries apply for loans from the stability mechanism. Soon after, the United States Federal Reserve System announced the start of its third monetary policy easing programme. Both these actions increased investors’ willingness to take risks in September.

Fixed income investments

The return on fixed income investments was 7.0 per cent, while the corresponding figure for the whole of 2011 was 4.1 per cent.

The return on fixed income investments remained good during the period despite the record low interest rates. The long-term German government bond interest rates declined during the beginning of the year until the beginning of June. After this, interest rates rose until mid-September when investors’ interest in them peaked again. In the beginning of the year, the difference of interest rates in periphery countries in relation to German government bonds decreased, but this favourable development turned during the second quarter until the operations of the ECB in August and September turned the development back into a positive direction. High-yield and emerging market bonds yielded the highest returns over the period.

Quoted equity investments

The return on equity investments was 13.1 per cent, while the corresponding figure for the whole of 2011 was -12.3 per cent.

The return of the equity portfolio was at a very good level at the end of September, although the year has once again seen great fluctuation in the global stock market. The actions to calm the financial market taken by central banks and countries seem to have worked at least for the time being. The third quarter of the year was indeed very good in terms of equities after the weak second quarter. VER’s equity investments in North America and emerging markets yielded the highest returns.

Other investments

Return on other investments was 1.9 per cent, while the corresponding figure for the whole of 2011 was 6.1 per cent.

The returns for other investment were at a good level at the end of September apart from investments in real estate funds. The uncertainty that continued in the market and the focus of investment costs to the beginning phases of funds has depleted the real estate fund investment returns during the year. Positive development in the stock market has in turn supported the business results from private equity investments. The best returns out of other investments were yielded by private equity investments.

For further details, please contact:

Managing Director Timo Löyttyniemi, tel. +358 9 2515 7010, mobile +358 50 336 2094

Established in 1990, VER is a fund outside the State budget, whose proceeds the State uses to prepare for the financing of future pension liabilities and the balancing of pension costs. VER is an investment organisation whose tasks include managing assets entrusted to it over the long term and ensuring that investments are secure, deliver a high return and can be converted into cash, while being appropriately diversified.

www.ver.fi

VER KEY FIGURES

The figures in this release have not been audited