The return on investments of the State Pension Fund of Finland was 4.0% in 2020; ten-year average return 5.5%

Press release 25 February 2021

The market value weighted return on the investments by the State Pension Fund of Finland (VER) reached 4.0 per cent in 2020 (13.8 per cent in 2019). The real rate of return was 3.8 per cent (12.8 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 5.5 per cent and real return 4.3 per cent. The average nominal five-year return is 5.4 per cent and real return 4.6 per cent.

At the end of 2020, the market value of the Fund’s assets amounted to EUR 21.0 billion (EUR 20.6 billion in 2019). Of all the investments, fixed income instruments accounted for 36.2 per cent and equities 52.4 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 6.2 per cent and liquid fixed income instruments 2.1 per cent. Of the other asset classes, the best performance was put in by non-listed equities at 12.2 per cent, infrastructure funds at 12.2 per cent and private equity funds at 6.6 per cent.

• “The year 2020 was very much shaped by COVID-19. Despite considerable fluctuations in the economy and the investment markets, we managed to put in a sound performance”, says CEO Timo Löyttyniemi.
• “All principal asset classes were in the black, with equities yielding a return of over 6 per cent and fixed income investments over 2 per cent. Aside from these, long-term off-stock-exchange investments in equities and infrastructure gave an excellent return.”
• “What matters is long-term return. VER’s real returns have remained sound for a long period of time, which has clearly consolidated the financial base for future pensions,” Löyttyniemi says.

In 2020, the State Pension Fund of Finland 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 increase continuously with the growing pension expenditure.

At the end of 2020, the state’s pension liability under the state pension system was EUR 93.1 billion. The funding ratio was around 23 per cent.

The Annual Report of the State Pension Fund of Finland is available here.

Inquiries: VER’s Chief Executive Officer 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 2020, the market value of the Fund’s investment portfolio stood at EUR 21.0 billion.