Ilmarinen

Ilmarinen’s return on investments 3.3 per cent – employment weakening

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The return on Ilmarinen’s investments in January–September was 3.3 per cent. Measures to improve cost-effectiveness continued. “Last year, we became the most cost-effective company in the industry, measured by the ratio of operating expenses to expense loading components. This year our operating expenses, which are necessary for providing pension security, have decreased further, and we are lowering the price of administrative costs for our customers by 20 per cent,” states President and CEO Jouko Pölönen.

Key figures from Ilmarinen's Interim report January–September 2023
Key figures from Ilmarinen's Interim report January–September 2023 Ilmarinen

The investment portfolio’s 3.3 per cent return was driven by the equity market’s positive performance and fixed income and credit risk investments. The rise in the interest rate level was reflected in the returns on real estate investments, which turned negative. The long-term average return since 1997 was 5.7 per cent. The market value of investments was EUR 57.7 billion. 

Ilmarinen’s cost-effectiveness improved further, as premiums written grew 5 per cent and operating expenses financed using loading income fell 2 per cent. Operating expenses were 0.34 per cent of the TyEL payroll and YEL income of the insured. In January–September, we paid approximately EUR 5.4 billion in pensions to around 455,000 pensioners. 

Higher long-term returns must be sought for pension assets

Amendments to earnings-related pension legislation that are necessary for securing the system’s sustainable financing and an adequate level of benefits have been written into the Government Programme. The Government’s goal is to strengthen public finances in the long term by roughly 0.4 percentage points in relation to GDP. That corresponds to around one billion euros.

The Finnish pension system ranked sixth in the world in the recently published Melbourne Mercer Global Pension Index comparative study. Although the earnings-related pension system is in good shape, preparations must be made to face the pressure to increase pension contributions due to the demographic development. 

Increasing the return on investments is an effective way to improve the pension system’s financial and social sustainability.  

“For that reason, the best possible return on pension assets must be ensured by developing solvency regulation. Current solvency regulations are short-sighted, complicated and encourage procyclical investment behaviour. Thus, investment operations cannot take advantage of the very long investment horizon of pension funds,” states Pölönen. 

Moreover, improving employment and prolonging careers play a key role in terms of the pension system’s future financing.

Employment is weakening

Ilmarinen’s business cycle index follows the monthly development of employment.

“Attention should be paid to improving productivity in order to achieve growth and curb indebtedness. The weakening employment is reflected in Ilmarinen’s business cycle index. The number of employees in our client companies began to fall in the summer for the first time in more than two years. Employment weakened further in September as the number of employees fell 1.4 per cent compared to the previous year,” says Pölönen. 

Of the various business sectors, the greatest decline has been seen in the number of employees in staff leasing and construction. Industry and the IT sector, however, grew year on year.

“When employment declines, productivity must be improved. It is important to harness help from digitalisation. Taking advantage of new technology, such as automation and AI, is essential. Ilmarinen continues to strongly develop these areas. Our customers benefit directly from the improvement in our efficiency. From the start of 2024, the administrative cost component will decrease by 20 per cent. We look after public social security and want to do so with continuously increasing efficiency,” says Pölönen.

Ilmarinen’s January–September 2023 development in brief

  • The return on Ilmarinen’s investment portfolio was 3.3 (-8.0) per cent, i.e. EUR 1.9 billion. The market value of investments grew to EUR 57.7 (56.3) billion. The long-term average return on investments since 1997 was 5.7 per cent. This corresponds to a real return of 3.7 per cent.
  • The total result grew to EUR 0.2 (-4.8) billion.  
  • Premiums written grew 5 per cent to EUR 5.2 (5.0) billion. EUR 5.4 (5.0) billion was paid in pensions.  
  • Net customer acquisition was EUR 135 (159) million and rolling customer retention for the previous 12 months was 96.6 (97.7) per cent.  
  • Operating expenses financed using loading income decreased 2 per cent to EUR 72 (73) million and were 0.34 (0.36) per cent of the TyEL payroll and YEL income of the insured.  
  • Solvency capital increased to EUR 12.0 (11.8) billion and the solvency ratio fell to 125.5 (125.8) per cent.
  • Outlook: Ilmarinen’s premiums written are expected to grow on the back of payroll growth, but the pace of growth is expected to slow from the previous year. 


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Key figures from Ilmarinen's Interim report January–September 2023
Key figures from Ilmarinen's Interim report January–September 2023
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Tietoja julkaisijasta

Ilmarinen’s task is to ensure that our customers receive the pension they earned from employment. We promote a better working life and thus help our customers succeed. In total, we are responsible for the pension cover of some 1,1 million people. We have investment assets of almost EUR 58 billion to cover pension liabilities. For more information, please visit: www.ilmarinen.fi.

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Lue lisää julkaisijalta Ilmarinen

Ilmarinen’s Financial Statements 2023: Return on investments was 5.8 per cent and cost-effectiveness improved further15.2.2024 13:09:50 EET | Tiedote

Ilmarinen’s return on investments was 5.8 per cent and cost-effectiveness improved further, as premiums written grew 4 per cent and operating expenses financed using loading income fell 5 per cent. Our customers benefit directly from the improvement in our efficiency: we lowered the administrative cost component included in Ilmarinen’s earnings-related pension insurance contribution by 20 per cent as of the start of 2024.

Ilmarinens bokslut 2023: Placeringsintäkterna var 5,8 procent och kostnadseffektiviteten förbättrades ytterligare15.2.2024 13:06:54 EET | Tiedote

Ilmarinens placeringsintäkter uppgick till 5,8 procent och kostnadseffektiviteten förbättrades ytterligare då premieinkomsten ökade med 4 procent och omkostnaderna sjönk med 5 procent. Våra kunder gynnas direkt av vår förbättrade effektivitet: i Ilmarinen sänktes arbetspensionsförsäkringsavgiftens omkostnadsdel med 20 procent vid ingången av 2024.

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