As a rule, earnings-related pension providers handle the pensions of private-sector employees and the self-employed.

A majority of all persons insured under the earnings-related pension acts have their insurance in a pension insurance company. Roughly 70 per cent of all persons insured under the earnings-related pension acts were insured with pension insurance companies. Little under 60 per cent of all recipients of earnings-related pensions got their pensions from a pension insurance company.

The pension insurance companies are:

  • Elo Mutual Pension Insurance Company
  • Ilmarinen Mutual Pensions Insurance Company
  • Varma Mutual Pension Insurance Company
  • Veritas Pension Insurance

The Statistical Database of the Finnish Centre for Pensions provides more information on pension providers, such as the number of their insured persons and pensioners as well as financial information.

A pension insurance company is a strictly regulated company form

Pension insurance companies are governed by the Act on Pension Insurance Companies (354/1997) and the Insurance Companies Act (521/2008).

In Finland, a pension insurance company can be founded by one or several natural or legal persons (for example, a company or a corporation). At least half of the founders have to live in (for legal persons, have to have their domicile) in the European Economic Area, unless the Ministry of Social Affairs and Health grants an exemption from this.

Foreign pension insurance companies cannot directly engage in statutory pension insurance in Finland, but a foreign corporation or natural person may establish a pension insurance company in Finland. The company is subject to the same restrictions regarding line of industry and concessions as a pension insurance company established by Finns. So far, no foreign insurance company is engaging in the earnings-related pension insurance business in Finland.

A pension insurance company may be a limited liability insurance company (incl. a public one) or a mutual insurance company. The owners of a mutual insurance company are the policyholders, that is, the employers and the insured (=employees), as well as any holders of guarantee shares.

The minimum basic capital required for a pension insurance company is 5 million euros.

A pension insurance company handling statutory earnings-related pension insurance is required to have a concession granted by the Council of State. The Council of State may include conditions in its concession, necessary to safeguard the interests of the policyholders and the insured, to ensure the stable functioning of the company and to promote a healthy development of the earnings-related pension insurance business. Moreover, a pension insurance company’s articles of association and any changes to them must be confirmed by the Insurance Supervisory Authority.

Earnings-related pension insurance to be kept separate from other business operations

A pension insurance company may not handle any other type of insurance activities than insurance under the Employee’s Pensions Act and the Self-Employed Persons’ Act and related reinsurance.

The EU Life Insurance Directive is not applied to Finnish pension insurance companies, which is why statutory earnings-related pension insurance has to be kept legally separate from the group’s other insurance activities.

The assets of a pension insurance company have to be kept separate from the assets of companies that belong to the same group as the pension insurance company. The annual accounts of a pension insurance company cannot be included in the consolidated accounts of another company.

Moreover, the financial management and payments traffic of a pension insurance company must be arranged so that assets are not used for arranging the financial management or payments traffic of another company which belongs to the same group.

Administration of pension insurance company

The administrative structure of pension insurance companies follows the standard company model. At the annual general meeting, power of decision is exercised by the company’s shareholders in accordance with the Insurance Companies Act. The Supervisory Board is elected at the general meeting. Its obligations are determined according to the legislation on limited companies.

The Supervisory Board nominates the members of the Board of Directors. The Supervisory Board and the Board of Directors have to represent the policyholders and the insured chosen among the persons suggested by the central labour market organisations that represent the employers and employees. There must be an equal number of such representatives for the employees and for the employers, and their combined number has to be at least half of the total number of members in the Supervisory Board and Board of Directors, respectively.

According to the Competitiveness Pact agreed on by the central labour market organisations, at least one third of the members of the supervisory boards must be employee representatives and one sixth employer representatives as of 2019. As of 2020, the same proportions apply to the members of the Board of Directors. This change is due to the fact that the employee share of the earnings-related pensions contribution will rise.

The pension insurance company must have a separate nominating committee, half of which consists of persons suggested by representatives of the policyholders and half of which by representatives of the insured. The nominating committee makes proposals concerning the remuneration and nomination of the members of the Supervisory Board to the general meeting and proposals concerning the remuneration and nomination of the members of the Board of Directors to the Supervisory Board.

Following standard practices in limited companies, the Board of Directors elects the managing director and supervises the managing director’s activities. The managing director of a pension insurance company may not function as the managing director of a credit institution or investment service company in the same company group or financial and insurance conglomerate as the insurance company. The managing director may not be a member of the Supervisory Board or the Board of Directors of the company.

Finnish Centre for Pensions – Central body of and expert on statutory earnings-related pensions