State Pension Fund of Finland’s return on investments 13.8% in 2019; ten-year average return 6.2%

The return at market values on the investments made by the State Pension Fund of Finland (VER) reached 13.8 per cent in 2019 (-3.4 per cent in 2018). The real rate of return was 12.8 per cent (-4.5 per cent). 

VER primarily seeks a long-term rate of return sufficient to finance the state pension system. VER’s average nominal rate of return over the past ten years is 6.2 per cent and real return 4.8 per cent. The average nominal five-year return is 5.6 per cent and real return 4.8 per cent.

For the first time in its history, the market value of VER’s assets exceeded EUR 20 billion, reaching EUR 20.6 billion (EUR 18.5 billion in 2018) at the end of 2019. Of all the investments, fixed income instruments accounted for 37.3 per cent and equities 50.9 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 24.6 per cent and liquid fixed-income instruments 5.0 per cent. Of the other asset classes, the best performance was put in by listed real estate investment trusts (REIT, 28.1%), private equity funds (14.2%) and infrastructure funds (12.8%).

• “The investment market was exceptionally favourable in 2019 and the State Pension Fund did well. VER achieved its best annual return in ten years,” says CEO Timo Viherkenttä.
• “The year was excellent, particularly for equity investments, but fixed income investments also proved a pleasant surprise. VER’s invested quite heavily in the fixed income market in the emerging economies, which, once again, gave a splendid return."
• "But what matters is long-term return. VER’s real returns have remained sound for over ten years now, which has clearly consolidated the financial base for future pensions,” Viherkenttä says.

In 2019, the State Pension Fund received approximately EUR 1.5 billion in pension contribution income and transferred some EUR 1.9 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 are increasing in the future continuously with the growing pension expenditure.

At the end of 2019, the state’s pension liability under the state pension system was EUR 92.7 billion. The funding ratio was around 22%.

The Annual Report of the State Pension Fund is available at www.ver.fi.

Inquiries:

Additional information is provided by 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 2019, the market value of the Fund’s investment portfolio stood at EUR 20.6 billion.