Keva’s interim report for 1 January – 30 June 2023: Keva reports positive results

Finance and investment Keva
Finance and investment Keva

Keva, which is responsible for the funding of local government and wellbeing services county pensions and for the investment of pension funds, reported a return of 3.1% on investments for the first half of 2023. At the end of June, Keva’s investments had a market value of EUR 63.2 billion, compared to EUR 62.5 billion a year earlier.

Keva’s investment operations generated a market value return of 3.1% for the first half of 2023. The return was 5.6% on listed equities and 3.9% on hedge funds. Private equity investments generated 1.2%, fixed income investments 1.6% and real estate investments (including real estate funds)

Listed equities and equity funds accounted for 32.1% and fixed income investments (including the impact of derivatives) for 25.4% of Keva’s total investment assets. Of the other asset classes, private equity investments accounted for 19.1%, real estate investments for 7.6% and hedge funds for 7.1%.

Development of the economy and financial markets varied in the early part of the year. Even though the worst fears of recession were avoided, economic growth slowed considerably as a result of rising interest rates and rapid inflation among other things. Inflation slowed clearly in the early part of the year, in particular with lower energy prices, and it is believed that the fastest phase of monetary policy tightening is over. Nevertheless, the outlook is uncertain and a tighter economic policy affects economic development after a delay. During the summer, employment took a downward turn. Pay rises and one-off payments increased the sum of wages and salaries and this was reflected in a clear growth in contribution income from Keva member organisations.

”Despite the many uncertainties in the global economy, stock markets were up, particularly in the USA, and this also supported Keva’s investment performance in the early part of the year,” says Keva CEO Jaakko Kiander.

Keva’s long-term return on investments has been good. The cumulative money-weighted return on investments since funding began in 1988 to the end of June 2023 was 3.6% a year. The average real return, excluding money weighting, over the same period was 4.8%. The real return, excluding money weighting, over the past five years has been 1.4% and the ten-year real return 3.8%.

Keva CIO Ari Huotari says that earlier in the year risk was neither clearly rewarded nor punished.

“For example, domestic equities were in clear retreat, whereas North American technology stocks were steadily rising at the same time. Construction and the real estate sector were in poor shape, also globally. At current inflation levels, no spectacular real returns are to be expected even at an annual level, especially with concerns about economic development overshadowing the rest of the year,” Huotari says.

Increase in contribution income from Keva member organisations

Keva is the largest earnings-related pension provider in Finland and is responsible for instituting pension cover in the public sector.

Contribution income amounted to EUR 3.06 billion during the first half of the year, up 6.9% compared to a year earlier. Among other things, pay rises and one-off payments contributed to this increase. EUR 3.35 billion, up 8.8%, was paid out in local government and wellbeing services county pensions. The 2023 index increases and growth in the number of pension recipients contributed to this increase. Approximately 577,000 persons had earnings-related pension insurance at the end of June.

EUR 2.7 billion in State pensions, EUR 126 million in Evangelical Lutheran Church of Finland pensions, EUR 61 million in Social Insurance Institution of Finland (Kela) pensions and EUR 16 million in Bank of Finland pensions were paid out during the first half of 2023. The State, Evangelical Lutheran Church of Finland, Kela and Bank of Finland pay their own pension expenditure and share of operating costs to Keva.


The figures in this release are unaudited.