​Ilmarinen Chief Sounds Pensions Warning As Working Population Shrinks

The chief executive of the largest of Finland’s pensions insurance companies has called for efforts to be made to maintain working ability among the population and prevent the risk of disability.

His comments came as the country’s top two pensions insurers both reported rising disability pension applications.

Reporting results for January to September 2019, Jouko Pölönen, Ilmarinen’s president and chief executive, said: “Last year, approximately 20,000 people retired on disability pensions, and the figure continues to grow.”

If this development continued, he said more than 80,000 people of working age would exit the labour market during the government’s term of office.

“Joint efforts to maintain work ability and prevent the disability risk are required from employees, employers, pension institutions and society as a whole,” Pölönen said.

“Joint efforts to prevent disability risk are required from employees, employers, pension institutions and society as a whole”

Jouko Pölönen, Ilmarinen president and chief executive

Pölönen said the pension system’s long-term financing was already challenged by the prospect of the working-age population shrinking at a faster rate in the 2040s, as revealed in the 2019 Population Projection published by Statistics Finland in late September.

Ilmarinen said it paid more than €370m in disability pensions in the January to September period, and reported that disability pension applications in those nine months had increased 3.5% from the previous year.

The firm said it aimed to reduce the risk of disability by working with its client companies to provide vocational rehabilitation for employees, improving working ability.

Varma, narrowly the second biggest pensions insurer, also noted in its interim results release today that growth in the number of disability pension applications had continued, and in January to September this total was 8% more than a year ago 

However, Varma also reported that the first nine months of this year had been its most profitable January-to-September period overall since the financial crisis ten years ago.

At Ilmarinen, Pölönen said the Finnish government was struggling to meet its employment rate target of 75%, and said attention should be paid to keeping the current working-age employees at work and physically able to work, alongside the creation of new jobs.

Between January and September this year, Ilmarinen reported investment returns of 8.2%, corresponding to €3.7bn, compared with 3% or €1.4bn this time last year.

At the end of September, its investments had grown to €49.1bn from €46.0bn at the end of 2018.

Varma reported a nine-month return on investments of 8.8%, amounting to €3.9bn, compared with a 3.5% return in the same period last year, while the market value of its investments rose to €47.4bn at the end of September from €44.0bn at the end of December.