Session: 88

Pensions

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Summary

In Finland the administration of the statutory employment pension scheme is decentralised in private, separate pension institutions. The article analyses how pension institutions' independent decision-making concerning the investment of employment pension funds supports the overall objectives set for the employment pension scheme. Pension institutions can independently decide on their investments taking account of the limitations laid down in legislation, and they are responsible for the success of their investments up to a possible bankruptcy. However, if a pension institution becomes bankrupt and its funds are not sufficient to cover its pension liabilities, the pension institutions are ultimately jointly and severally liable.

To begin with, the article describes shortly the Finnish employment pension scheme and its financing. Provisions on the benefits, objectives and principles of the statutory employment pension scheme are laid down in the employment pension legislation concerning all pension institutions. The article also deals with the administration and decision-making procedures of pension institutions in the different pension plan options.

The analysis is based on the investment plans and the data on annual accounts of pension institutions. In its investment plan a pension institution sets the goals for its investments, and the realisation of the plan can be assessed on the basis of the data on the annual accounts. At the end of the article there is a short description of the mutual competition of pension institutions in the diversified employment pension scheme.

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