Press release 18th April 2012

Press release, 18 April 2012

5.4 per cent return on investment for the State Pension Fund

The return on investment of the State Pension Fund (VER) for the period from 1 January to 31 March 2012 was 5.4 per cent, while the corresponding figure for the whole of 2011 was -2.3 per cent. The geometric mean of VER’s five-year return was 2.8 per cent, while the geometric mean for VER’s ten-year return was 5.3 per cent.

The market value of VER’s investments was 14.5 billion euros at the end of March (13.7 billion euros on 31 December 2011). VER investments comprised fixed income investments of 54.9 (56.6) per cent, equities of 38.1 (36.4) per cent, and other investments of 7.0 (6.9) per cent.

The return on fixed-income investments was 2.7 per cent and the return on stock investments was 10.8 per cent. Other investments reached a 0.4 per cent return.

The returns on VER’s investments were good. The beginning of the year went very well in the markets. Stock markets rose sharply and interest rates remained low. After such a strong rise in the stock market, the main focus for the rest of the year will be the continuation of economic growth both in Europe and globally, says Managing Director Timo Löyttyniemi.

The estimated pension contributions for the period January to March is approximately 389 million euros, which corresponds to the figures for 2011.

A total of 411 million euros of VER assets had been transferred to the State budget by the end of March. The corresponding figure for the period 1 January to 31 March 2011 was 387 million 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. This was thanks to the ECB’s two massive financing operations, which brought over thousand billion euros of three-year funding at a one per cent interest rate. This development was also supported by improving economic data, the subduing of the threat of imminent Greek insolvency along with second bailout package granted for the country. This favourable process was cut short in the latter half of March, however, when economic data turned out weaker than expected. At the same time, the Spanish government finances were revealed to be weaker than assumed.

Fixed income investments

The return on fixed income investments was 2.7 per cent, while the corresponding figure for the whole of 2011 was 4.1 per cent.

The return on fixed income investments was good in the first quarter. This was evident especially in the returns on the emerging market government bonds and the corporate bond portfolio. Returns from government bonds remained modest due to the low interest rate. High Yield and emerging market bonds yielded the highest returns over the period under review.

Quoted equity investments

The return on equity investments was 10.8 per cent, while the corresponding figure for the whole of 2011 was -12.3 per cent.

The stock market showed an upward trend in the first quarter of 2012. The market sentiment showed clear signs of improvement during this quarter compared to the previous year. The ECB financing operation for banks was especially well received in the stock market. Concerns remained the same as before, that is, the market is still worried about the financial situation of Southern European countries. VER’s Nordic and emerging markets equity investments yielded the highest returns.

Other investments

Return on other investments was 0.4 per cent, while the corresponding figure for the whole of 2011 was 6.1 per cent.

In other investments, the returns during the first quarter were quite modest, mainly attributing cash flows in and out of the portfolios. However, returns remained positive apart from investments in real estate funds. The improvement of overall market conditions served as the background for positive returns on absolute return funds.

For further details, please contact:

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

The State Pension Fund (VER) is a fund external to the State budget, established in 1990, whose proceeds the Finnish state uses to prepare for the financing of future pension liabilities and the balancing of pension costs. VER is an investment organisation. The function of VER is long-term management of the assets that are entrusted to it with a view to ensuring the security, returns, and liquidity of investments and their appropriate diversity and diversification.

www.ver.fi

VER'S KEY FIGURES

The figures in this release have not been audited.