Equity markets rebound after spring slump – return on Varma’s investments 4.5 per cent

In January–September, Varma’s investments yielded 4.5 (7.7*) per cent, i.e. EUR 2.9 billion. The value of Varma’s investments was EUR 66.7 (64.4 on 1 Jan) billion. 

“The investment markets have remained stable in an uncertain geopolitical and economic environment. The discrepancy between the Finnish economy and the investment markets is currently exceptionally clear. Investor confidence in the economy has been higher than consumer confidence,” says Varma’s President and CEO Risto Murto.

All of Varma’s asset classes generated positive returns in January–September. The return on Varma’s equity investments was 5.8 (11.2) per cent. The return on listed equities was 10.0 (14.8) per cent, thanks especially to the strong 21.3 per cent return on Finnish equities. Fixed income investments yielded 3.5 (4.7) per cent, real estate investments 1.8 (2.1) per cent, and hedge funds 3.6 (6.7) per cent.

“The equity markets have risen strongly and continuously after recovering from the spring shock. In the summer and autumn, inflation, employment and industrial demand have developed favourably relative to expectations. In the USA, economic growth is based on enthusiasm for AI and data centre investments,” says Varma’s Deputy CEO Markus Aho. 

“Of Varma’s investments, Finnish equities had the highest returns, but the differences compared to the rest of the market narrowed during the summer and autumn. The weak dollar has a negative effect on dollar-denominated investments, even though equity valuations in the US are already quite high,” Aho says.

Varma’s solvency ratio was EUR 135.1 per cent, and solvency capital was at a secure level, i.e. 1.7 times (1.7 on 1 Jan) the solvency limit.

Varma increased its investments in Finnish growth companies

With investments in four Finnish growth companies, Varma increased its investments in domestic growth companies. Investing in growth companies is part of the productive and secure investment of pension assets, with some investments diversified into investee companies with high return expectations. Unlisted investments are an integral part of Varma’s investment operations and also align with the upcoming pension reform.

Finland’s pension system ranked eighth overall in the international Mercer CFA Institute Global Pension Index. In terms of the integrity of pension system governance, Finland ranked number one in the world.

Varma-owned Katajanokan Laituri received prestigious architecture award

Katajanokan Laituri, a wooden commercial building owned by Varma, has won Finland’s most prestigious architecture award, the Finlandia Prize for Architecture. Varma’s ambition was to create a commercial building with a long useful life, and which is easy to modify, has a low carbon footprint and is energy efficient. The new building, located on the waterfront of Helsinki’s city centre, supports Varma’s environmental goals.  

Varma has drawn up a new sustainability programme for 2026–2030. The sustainability programme is a continuation of the previous programme. At the core of the programme is ensuring earnings-related pension cover, investing responsibly, promoting sustainable work ability, and responsibility for Varma employees.

Earnings-related pension insurance companies hope for clarity in YEL income 

Varma fulfilled its obligation as an earnings-related pension insurance company by reviewing the YEL income of around 12,000 entrepreneurs this year. The YEL income of 37 per cent of those entrepreneurs was already at the correct level. This year, YEL income was reviewed for entrepreneurs whose income exceeds EUR 25,000 per year, or for those whose income was not reviewed in the previous two years.

The project initiated by the Finnish government to determine the development needs related to the pension security of the self-employed, i.e. the YEL system, is set to be completed by the end of November 2025.

“The view of pension insurance companies is that the definition of entrepreneurs’ YEL income should be changed from the current calculation method to one that is based on actual earnings. The current definition of YEL income is difficult to understand and rigid,” says Risto Murto.

Payroll development remains at a good level

The TyEL payroll of Varma’s client companies grew 3.8 per cent in January–September compared to a year ago. The payroll continued to grow well despite growing unemployment and weak economic development in Finland. 

EUR 106 (106) million in net annual TyEL premiums written transferred to Varma from other earnings-related pension insurance companies during the nine-month period. Sales of pension insurance policies to new customers amounted to EUR 62 (63) million.

Between January and September, Varma made a total of 36,600 pension decisions, and pensions were paid out in the amount of EUR 5.8 billion, to 350,000 pension recipients.

*The comparison figures in parentheses are from 30 September 2024 unless otherwise indicated.