President and CEO's review

We are building an even more customer-focussed and attractive Ilmarinen – by operating openly and responsibly and achieving success through teamwork

2018 was a historical year for Ilmarinen. In the beginning of the year, we merged with Etera, forming Finland’s largest employment pension company in charge of the earnings-related pension cover of close to 1.2 million Finns. We are working to make the post-merger Ilmarinen an even more customer-focussed, efficient and attractive earnings-related pension partner.

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Key figures 2018

investment returns
-1.4
%
pensions paid
5.7
EUR BN
premiums written
5.4
EUR BN
client bonuses
120
EUR mill.

Take a look at the key figures

Ilmarinen in 2018

  1.  

    Following the merger, Ilmarinen became Finland’s largest earnings-related pension provider in the private sector, with responsibility for the pension cover of more than 1.1 million Finns. In February, we garnered interest by publishing, at the iAreena event, a survey according to which people currently retire on old-age pension in good health and up to four out of five people would have been able to continue in gainful employment. In March, we chose, from among 100 nominees, Finland’s Best Boss in a nationwide competition. In the first quarter of the year, we renewed our organisation by combining the strengths of two companies to better respond to the changing operating environment. At the beginning of March, President and CEO Timo Ritakallio took on his new position as President of OP Financial Group, and Deputy CEO Stefan Björkman took the reins.

  2.  

    The implementation of the merger went according to plan and the changes led to more consistent services for our customers. The first half of the year showed that the targeted synergy benefits are coming to fruition. We launched the new ‘Energy in the work community’ (Työyhteisövire) study that provides a comprehensive overview of the work community’s strengths and improvement areas. The first Masters in Work Capacity trained by Ilmarinen graduated in April. Our efforts to promote responsible investment received global recognition.

  3.  

    Jouko Pölönen started as Ilmarinen’s President and CEO on 1 August. Based on feedback from our customers, we strengthened our work capacity services and structured the management of work capacity risks and rehabilitation into a business division in its own right. In September, we awarded Finland’s happiest entrepreneur. We expanded our international real estate investment portfolio by investing in office properties in the Netherlands and in Germany. The shopping centre Redi, which is partly owned by Ilmarinen, opened its doors in Helsinki’s Kalasatama district in September. Our office building was granted LEED environmental certification.

  4.  

    We prepared for the introduction of the national Incomes Register at the end of the year and communicated actively to our customers on the changes that the Incomes Register will bring to payroll notifications. Together with our partners, we launched the concept ’Suitable work for everyone’ on our website, in a bid to increase awareness and promote the employment of persons with partial work capacity. The Center for Finnish Fashion, Garden, opened its doors on the second floor of Kämp Galleria in the heart of Helsinki.

Pensions

150 000
online pension record downloads

460,000 pensioners. Most of the pensions (80%) we paid were old-age pensions. We made 34,000 new pension decisions.

The number of old-age pensions took a downward turn as a result of the pension reform, which entered into force in 2017. Following the pension reform, the retirement age started to gradually rise.

Of the old-age pension applications, 54 per cent were submitted online. Pension applications arriving online are processed quickly – in some cases, the decision is issued the same day. On our website, applicants can check in real time if a pension decision has already been issued.

Pension records are sent every three years to people under the age of 60 and annually to people aged over 60. Pension records can also be checked on Ilmarinen’s website. In 2018, pension records were downloaded more than 150,000 times from our website, which was three times as much as in the previous year. Pension records in paper format only contain the payroll information for the previous year, while online pension records are updated monthly.

During the year, we prepared for the introduction of the national Incomes Register. We also actively communicated to our customers on the changes caused by the Incomes Register. As of the beginning of 2019, employers report the wages and salaries paid by them to the Incomes Register, where the information will be available in real time to employment pension companies and other parties who require the information. Separate annual or monthly notifications to employment pension companies will no longer be required. That means that earnings-related pension contributions are final straight away.

The Incomes Register eases the administrative burden for companies, when payroll information no longer needs to be reported separately to many different players. The Incomes Register also offers citizens a real-time view of their earnings data."
Tiina Nurmi, Head of Insurance and Pension Services

Work capacity and rehabilitation

around
70 %
of rehabilitees return to working life

Ilmarinen collaborates closely with its customer companies in managing disability risks and work capacity. The objective is to promote work capacity and prevent disability, thus building a better working life. Co-operation with clients is systematic and goal-oriented and the projects are targeted at jointly identified development areas to reduce disability risks.

In 2018, we organised for our customer companies 54 coaching sessions to support work capacity management throughout Finland, attracting 3,100 people. During the year, 3,200 distinct coaching or other projects to maintain work capacity were also underway in co-operation with clients. These projects covered around 176,000 employees insured with Ilmarinen and focussed on supporting work capacity and developing supervisory work and the functioning of work communities. The Master in Work Capacity training programme was particularly popular, and the first participants completed the course in spring 2018. Ilmarinen’s Better Working Life service package was expanded in 2018 through the addition of the Työyhteisövire survey that charts work communities’ energy levels.

We also support the management of disability risks in our client companies through vocational rehabilitation. The number of rehabilitees continued to increase. In 2018, some 4,500 new people received confirmation of support for changing careers or returning to work. A total of 9,400 different rehabilitation decisions were issued in 2018. Around seventy per cent of our rehabilitees return to working life.

We support our customer companies in work capacity management and in managing work capacity risks. Work capacity management plays a major role not only for employees and companies, but also for society at large and Finnish careers." Kristiina Halonen, Head of Work Capacity

Investments

Investment assets
€46.0
bn

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

Global economic growth was brisk in 2018, although the expanding trade war and tightening monetary policy weakened the outlook. During the final quarter of the year, equity markets took a massive downward turn, which pushed Ilmarinen’s full-year investment return 1.4 per cent into the red. In the long term, investments have performed well: at 5.6 per cent per annum on average, which corresponds to a real return of 4.0 per cent. Our solvency is on a good level, allowing Ilmarinen to take investment risks in line with its long-term investment strategy.

“The year 2019 has got off to a positive start in the markets, but it remains to be seen whether the rise is sustainable. Brexit, the trade war and the fixed-income market outlook, among other things, are fuelling uncertainty on the equity markets,” says Ilmarinen’s CIO Mikko Mursula in an interview.

As an earnings-related pension provider our investment horizon is long. Thanks to our good solvency position, we still have the opportunity to invest in a diversified manner and seek returns from the markets. In line with our long-term investment strategy, we are looking for alternatives for government bonds by exploring new investments in, among other things, non-listed equities and international real estate."
Mikko Mursula, CIO

Personnel

employee satisfaction
3.8

Ilmarinen’s personnel perform work that matters: we improve workplaces’ daily lives and ensure that the people insured with Ilmarinen receive the pension they earned from employment.

Meaningful work also provides Ilmarinen’s employees with energy. We place great importance on our personnel’s work capacity and good leadership. In building a better working life for our customers, we want to serve as an example of an energising work community.

Ilmarinen grew at the start of 2018 with the merger of Etera and Ilmarinen. The merger resulted in personnel reductions but it also led to the creation of new jobs. We strengthened our expertise, for instance, in work capacity management, robotics and real estate investment. The new organisational model is better adapted to the changes in our operating environment.

During the year, we built a new shared life with our new colleagues. We supported our employees in the change and focussed on harmonising our ways of operating.

Our personnel faced a major challenge in creating models and coordinating information systems. Training was organised to support learning. The creation of common ways of operating and a shared operating culture also took centre stage. Coaching was provided to both supervisors and employees, and team-building was also supported.

The strategic theme for 2018 was “We will succeed in the merger – with positive energy”. A well-functioning work community requires an inclusive corporate culture, good leadership and the ability to lead oneself.

We measure these with an annual work atmosphere survey. The changes brought by the merger had little impact on the overall score of the survey, which remained almost equal to the previous year’s level. Supervisors received a good score in the survey. Work enthusiasm has also remained on a high level. In 2019, we will place greater emphasis on listening to and engaging our employees, which stood out as the biggest improvement opportunity in the survey.

In many ways, 2018 was a unique year for our employees. With the merger of two pension companies and preparations for the introduction of the national Incomes Register, they had a lot on their plates and many problems to solve. We worked together to develop new approaches and run our day-to-day operations for our customers’ benefit." Sami Ärilä, Head of HR