State Pension Fund earns 1.1 per cent return on investments

The return on investments made by the State Pension Fund (VER) reached 1.1 per cent during 1 January – 30 September 2015.

VER’s average rate of return is 4.4 per cent over the past ten years and 5.3 per cent over the past five years.

Of the investments made by VER, fixed income instruments accounted for 50.8 per cent, equities for 41.7 per cent and other investments for 7.5 per cent of the total.

During the first three quarters, the best return was generated by private equity investments (15.8%) and unlisted equities (7.2%). Listed equities yielded a return of 2.0 per cent and liquid fixed-income instruments -0.3%.

“Investments during the first three quarters of the year were characterised by two distinct trends. The overall fall in share prices following the strong market performance during the first few months of the year continued with twists and turns up to the end of September. The plunge was deepest in August when fears about stalling economic growth in China caused investors to flee the emerging markets,” says CEO Timo Viherkenttä.

“By contrast, the last quarter of the reporting year started in a more upbeat mood. For long-term investors like the State Pension Fund, great fluctuations in share prices also offer new opportunities. Early this year, VER sold large chunks of equities, but after the fall in share prices during late summer we’ve been shopping around again,” continues Viherkenttä. 

As VER was in this year required to contribute an additional EUR 500 million to the government budget, the market value of its investments at the end of September was lower than at the beginning of the year. At the end of September, the market value of the Fund’s assets amounted to EUR 17.4 billion (EUR 17.6 billion on 31 December 2014). During January–September VER’s premium income amounted to EUR 1,252 million while a total of EUR 1,705 million was transferred to the government budget.

Relatively speaking, the state’s pension liabilities have been pre-funded to a lesser extent than in the private and municipal sector. At the end of 2014, the state’s pension liabilities amounted to EUR 95.4 billion and the funding ratio was 18 per cent. According to the State Pension Act, the State Pension Fund will be grown until its assets cover 25 per cent of the state’s pension liabilities.

Further information:

Please take a look at The State Pension Fund’s Interim report here.

Inquiries: CEO Timo Viherkenttä tel.: +358 9 2515 7010

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 2015, the market value of the Fund’s investment portfolio stood at EUR 17.4 billion.

All the figures presented in this press release are preliminary and unaudited.