President and CEO's review

Ilmarinen in 2016 – rapid progress towards strategic goals

In 2016, we started implementing Ilmarinen’s new strategy and made rapid progress towards the goals we had set. In accordance with our strategy, we focus on investing successfully, growing profitably, offering digital services and energising our work community.

Our new development concept called Wauhdittamo, designed to initially engage our own personnel in developing new services, provided us with new momentum. Towards the end of the year, we launched the second phase of Wauhdittamo which also involves our customers in generating ideas and developing services. Through bold, agile and open development Ilmarinen wishes to take on a new role in supporting the growth and success of Finnish companies.

Our goal is to be the most attractive earnings-related pension partner.

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Key figures

value of investment assets
37.2
EUR BN
pensions paid
4.6
EUR BN
premiums written
4.3
EUR BN
client bonuses
102
EUR mill.

Take a look at the key figures

Ilmarinen in 2016

  1. Buoyed by its new strategy, Ilmarinen develops its operations in an open and agile manner. Well-being at work services are also renewed. New investments are made actively. Declining share prices reduce first-quarter investment returns.

  2. Ilmarinen grants the Personnel Action of the Year and the Happiest Entrepreneur of Finland awards. Ilmarinen is awarded for its private equity investments. New investments are made in solar power and renewable energy, among other things. Ilmarinen’s open innovation process Wauhdittamo results in four services to be developed further. Service development continues to be active and investment returns slowly improve.

  3. The development of services continues at a brisk pace, as Ilmarinen launches the ‘Parempi vire’ mobile app to improve work capacity and the Suitable Job service targeted at large companies. New well-being at work managers complete the regional services offered by the company. The implementation of the new pension system causes delays in the processing of pension applications. Pekka Puustinen is appointed as the company’s new Chief Customer Officer. Investment returns climb back into the black.

  4. Ilmarinen grants the Senior Deed of the Year award for the ninth time. The situation in pension application processing improves and upgrades are implemented in the other online services as well. Ilmarinen continues its efforts to improve the energy efficiency of its properties and the company’s investment operations’ first climate policy is published. Ilmarinen’s President and CEO Timo Ritakallio is elected President of the Finnish Olympic Committee. The second round of the Wauhdittamo development platform is started up.

Pensions

Ilmarinen pays pensions to approximately 330,000 pension recipients. In 2016, the company paid roughly EUR 4.6 billion in pensions, an increase of three per cent on the previous year. Most of the pensions (84%) were old-age pensions.

330 000
pension recipients

In 2016, the number of new pension applications increased by 16 per cent to close to 27,000. Old-age pensions increased the most. The implementation of the new pension system caused temporary delays in the processing of pension applications. Towards the end of the year, the situation improved and upgrades were implemented in the other online services as well. For instance, it is now easier to track the processing of the applications through the online services.

During the year, preparations were made for the pension reform which entered into force on 1 January 2017 and entailed changes to pension types, pension accrual and age limits. During the year, the reform was actively communicated and several training sessions were organised for Ilmarinen’s personnel and customers. In April, Ilmarinen launched a calculator that enables customers to calculate the effects of the pension reform on their old-age pensions. By logging into the service for private customers, it is also possible to estimate the amount of the new partial early old-age pension. Over 73,000 old-age pension estimates and 12,000 partial old-age pension estimates were made by the end of the year.

The pension reform clearly increases the fairness of the system. We provided extensive information to our future pension recipients on the reform so that everyone can estimate the impacts it will have on their pensions for themselves.
- Nina Bruun, Department Manager

Customers & services

70 %
of rehabilitees return to working life

Ilmarinen is building a better working life together with its customers. This co-operation is aimed at improving the quality of working life, preventing disability risk and encouraging employers to carry out better personnel actions.

The Better Working Life services are offered to all of our customers. For Ilmarinen, it is important that our services are goal-oriented, efficient and compliant with regulations.

In 2016, Ilmarinen paid special attention to early intervention, reflected on the shift in working life and sketched out the capabilities needed for the working life of the future. Ilmarinen renewed its online ‘Path to a Better Working Life’ service. The path provides tips on work capacity management and securing work capacity, in particular from the perspective of SMEs. Digital services to support work capacity management were developed further. Ilmarinen launched the Better Working Life virtual control room which makes companies’ disability risk easier to predict and manage. The Parempi vire service for smartphones, in turn, is a digital tool for improving an individual’s work capacity and overall well-being.

Ilmarinen is reinforcing its presence in the everyday lives of customers outside the Helsinki area. That is why it strengthened its resources last year by recruiting regional well-being at work managers in Oulu, Turku and Tampere.

During the year, Ilmarinen carried out more than 2,100 work capacity management projects together with its client companies. A total of 43 coaching sessions and webinars based on the Path to a Better Working Life concept were organised for customer companies around Finland. They attracted a record number of participants, at more than 2,500.

Ilmarinen also supports the management of disability risks in its client companies through vocational rehabilitation. In 2016, approximately 3,400 vocational rehabilitation applicants received confirmation of support from Ilmarinen for changing careers or returning to work. This is an increase of more than 10 per cent on the previous year. The new Sopiva työ service boosts the utilisation of vocational rehabilitation at the workplace.

Projects that support work capacity are Ilmarinen’s and its customer companies’ joint development projects that aim to build a better working life and promote good personnel management
- Kati Huoponen, Director, Well-Being at Work

Investments 2016

By investing funded pension assets profitably and securely, Ilmarinen ensures that future generations will also receive, in due time, the pensions they have earned. Furthermore, we wish to be an active owner and a responsible investor; in our view, responsibility is a key part of investment risk management.

From the perspective of investment returns, 2016 was twofold. The early part of the year was marked by a strong decline in share prices, and Ilmarinen’s investment returns also remained in negative territory. Towards the end of the year, performance improved clearly, with the full-year investment return rising to 4.8%. At the end of the year, the market value of investments amounted to EUR 37.2 billion. Our solvency remained strong, which will also serve as a buffer against market volatility in tougher times.

Both the Brexit referendum and the US presidential election rocked the markets in 2016. Read more about the eventful investment year and expectations for 2017 in CIO Mikko Mursula’s interview.

Ilmarinen succeeded well in its overall allocation, i.e. in diversifying investments across the various asset classes. We achieved the best return on investments in non-listed equities and shares, and Finnish equities and shares also performed very well.
- Mikko Mursula, CIO

Personnel matters

Ilmarinen’s personnel performs work that matters: they improve workplaces’ daily lives and ensure that the people insured with us receive the pension they earned from employment. According to indicators, Ilmarinen’s close to 600 employees are proud of their work and supervisory work is at a good level. Personnel turnover and the number of absences due to illness are low. According to its strategy, Ilmarinen also wishes to be an energising workplace where positive energy and activeness continue throughout the day. Among other things, this requires a culture of continuous improvement that does away with unnecessary bureaucracy and creates smooth day-to-day activities.