Earnings-related pension assets grew by EUR 10 billion in first half of 2024

The positive performance of earnings-related pension investments continued during Q2, in spite of the sluggish state of the Finnish economy.

“The appreciation of assets in the first six months of 2024 was largely thanks to listed equities. In addition to equity investments, alternative investments performed relatively well. Stabilized inflation and expectations of interests-rate cuts supported market positivity,” says Kimmo Koivurinne, an analyst at TELA, the Finnish Pension Alliance.

The nominal yield on earnings-related pension assets in the first half of the year was 5.2 per cent. The real yield, adjusted to remove the effects of inflation on total return, was 4.6 per cent. The source of the figures is TELA statistics.

The value of pension assets reached the highest level yet recorded. At the same time, the public discussion has raised concerns about the weak yields of Finnish equity investments.

“In recent years, the Helsinki exchange has performed relatively weakly compared to European or North American equities, for example. However, diversification is at the heart of earnings-related pension investment strategies, and it will continue to play an important role, both geographically and in terms of asset class. Diversification allows us to aim for yields that are at least reasonable, even if there are large market fluctuations somewhere in the world,” Koivurinne says.

Of the total assets, around 20 per cent is invested in Finland, just under 17 per cent in the rest of the Eurozone, and just under 64 per cent outside it. Equity and stock-type investments account for 57 per cent or EUR 149 billion of the entire EUR 261 billion in assets. Of these, 15 per cent are invested in Finland, 15 per cent elsewhere in the Eurozone and 70 per cent outside it.

The proportion of Finnish equity investments has halved in two decades. In 2004, the share of Finnish equities in earnings-related pension assets was around 30 per cent. Around 20 per cent were elsewhere in the Eurozone and 50 per cent outside the Eurozone.

Details on earnings-related pension asset yields

In the first half of 2024, the yields per investment class were:

• equity and equity-type investments, real yield 7.8 per cent
• fixed-income investments, real yield 0.8 per cent
• property investments, real yield -1.3 per cent
• alternative investments, real yield 4.7 per cent.

There were few if any changes to the breakdown in assets by class or geographical region during the quarter.

The figures for earning-related pension assets compiled by TELA pertain to the pension assets managed by pension providers, pension funds, pension foundations, the Pension Fund for the Employees of KELA, KEVA, the Church Pension Fund, the Farmers’ Social Insurance Institution, the Seafarers’ Pension Fund, the Bank of Finland’s Pension Fund, and the State Pension Fund of Finland. Only statutory pension coverage is included in the statistics.

The pension assets for which TELA compiles statistics do not contain other receivables and debts or tangible assets recognized in the balance sheet. The earnings-related pension assets listed here refer to investable assets.

More detailed information on the amount and allocation of investment assets is available in full on the Amount of pension assets page. You can also browse data on the TELA statistical data base.
TELA will next publish statistics on pension assets, for Q3 2024, in November–December.