The objective of pension funding and investment operations is to keep future pension contributions stable when pension expenditure grows. As the population ages, earnings-related pension expenditures increase. However, the effect on the contribution level can be significantly reduced through funds. A one-percent increase in the long-term real average return of investments reduces the pressure to raise the contribution level by slightly over two percentage points.

In the private sector, pensions have been funded already since the initial stages of the scheme, whereas in the public sector, pensions have been funded for three decades. The funding follows different principles in the private and in the public sector, and the investment rules are also different.

At year-end 2022, the earnings-related pension assets totalled  238 billion euros, of which 150 billion belonged to the private sector. The largest proportion of assets was invested in shares:

  • equities and equity-like instruments 53 %
  • interest-bearing instruments 28 %
  • real estate 10 %
  • alternative investments 9 %.

The share of investments in Finnish objects has declined in recent years while the share of investments in countries outside the eurozone has grown. The ratios in the different areas in 2020 were:

  • 23 % in Finland
  • 17 % in the rest of the eurozone, and
  • 60 % outside the eurozone.

In this section, we describe the pension providers’ investment operations, as well as the allocation and return of investments. The Finnish Pension Alliance TELA releases statistics for each quarter of the year on their website in section “Pension Assets and Economics”.

The law stipulates that pension assets must be invested diversely, profitably and securely. The issue is phrased slightly differently in the acts concerning the various pension providers, but the central intent is the same. The regulation means that the investment operations of the pension providers cannot focus solely on minimising risks or maximising profit. Instead, the pension providers must look for a a compromise between these two opposing goals.

Each pension provider makes their independent investment decisions. Their board of directors is responsible for the investment operations. Private sector pension providers must draw up an annual investment plan, which the board of directors approves. Although public sector pension providers are not under legal obligation to do so, they also draw up investment plans.

Private and public sector pension investment operations are presented separately on this site because the rules governing them differ significantly from each other in terms of solvency and liability calculations and risk coverage.

More on other sites

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