Financing and Investments
In Finland, statutory earnings-related pensions are financed mainly by the pension contributions paid each year. However, part of the pensions are financed with funded assets and returns on funds. Employers, workers and self-employed persons pay statutory earnings-related pension contributions. Part of the earnings-related pension contributions are funded into funds governed by earnings-related pension providers. They are under obligation to invest the assets profitably and prudently and to finance an agreed share of the pension from their own fund.
The earnings-related pension is granted and paid by the earnings-related pension provider in which the worker was last insured before retiring. In the cost division carried out by the Finnish Centre for Pensions, the shares of the expenses for paid pensions that are the liabilities of the various actors are sorted out.
The earnings-related pension system’s assets decreased in 2022 with 16.4 billion euros. Total assets at year-end were 242.4 billion euros.
The decline in pension assets for 2022 was mainly due to investment losses. They amounted to 14.8 billion euros.
Statutory earnings-related pensions are financed mainly through the pay-as-you-go (PAYG) system, that is, the earnings-related pension contributions paid in the year in question. Part of the pensions are financed under the partial funding principle by using both earnings-related pension contributions and previously accumulated funds.
Statistics on earnings-related financing
The Finnish Centre for Pensions produces time series from the financial statements of the pension providers. The pension providers deliver also figures to the cost division. The financing of pension tables are published yearly in The Finnish Centre for Pensions statistical database.