President and CEO's review

Timo Ritakallio

Ilmarinen in 2017 – succeeding together

2017 was a milestone year for Ilmarinen. The Boards of Ilmarinen and Etera signed a merger agreement in June, and after the decisions of the General Meetings and permission from the Financial Supervisory Authority, we were able to start up our operations as Finland’s largest private sector earnings-related pension provider at the start of 2018. From now on, we will be responsible for the pension cover of more than 1.1 million Finns.

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Key figures 2017

investment returns
7.2
%
pensions paid
4.7
EUR BN
premiums written
4.3
EUR BN
client bonuses
120
EUR mill.

Take a look at the key figures

Ilmarinen in 2017

  1.  

    We kicked off Finland’s centennial year with a campaign to collect a hundred deeds for a better working life. The pension reform entered into force at the start of the year and, in particular, a new type of pension, the partial early old-age pension, stirred up interest among customers. In the second round of the Wauhdittamo innovation process, we came up with new services together with our customers.

  2.  

    We launched the Parempi vire mobile app that supports well-being, making it available to all our customers. Our long-term efforts to take the climate impacts of our investment operations into account were recognised when the international climate organisation AODP gave Ilmarinen the highest AAA grade. At the end of June, the Boards of Ilmarinen and Etera signed the merger agreement according to which Etera merged into Ilmarinen at the start of 2018. Together we form a solvent and cost-effective earnings-related pension company that offers its customers even better and more diverse customer benefits, providing the entire earnings-related pension sector with new momentum.

  3.  

    We were successful in the Responsible Summer Job competition and received praise specifically for a good application process. As part of Finland’s centennial campaign, we made a donation to self-employed persons’ well-being at work research. Ilmarinen’s extraordinary general meeting approved the merger of Ilmarinen and Etera.

  4.  

    Ilmarinen’s and Etera’s merger got the green light in October when the Financial Supervisory Authority approved the merger. Ilmarinen’s Board of Directors received new members and a new Executive Group was appointed. Ilmarinen’s Board of Directors appointed Jouko Pölönen as the new President and CEO. In March 2018, Timo Ritakallio will take over the helm at OP Financial Group. In real estate investments, we continued to diversify our portfolio globally by expanding our investments on the US, UK, German and Dutch real estate markets.

Pensions

60%
of pension applications online

In 2017, Ilmarinen paid pensions to approximately 340,000 pension recipients. We paid roughly EUR 4.7 billion in pensions, an increase of three per cent on the previous year. Most of the pensions (80%) we paid were old-age pensions. We made altogether 46,000 pension decisions. The number of new pension decisions increased by 11 per cent to close to 29,000.  

2017 brought with it the long-awaited pension reform. The pension reform changed pension types, accrual and age limits. The new partial early old-age pension proved to be a particularly popular type of pension and it clearly surpassed the previous part-time pension in terms of popularity. We issued one positive decision concerning another new type of pension, the years-of-service pension, in December 2017. We expect the years-of-service pension’s popularity to grow as the retirement age rises.

We provided a steady flow of news on the pension reform throughout the year and directed those who were interested to the ilmarinen.fi online service. Online, Ilmarinen’s customers can, for instance, calculate how the pension reform will impact their retirement age and how large their pension will be. By logging in to the service for private customers, the customer can also estimate their partial early old-age pension and old-age pension amounts. Applying for pension is also easy to do online. Close to 60 per cent of old-age pensions were applied for online and 30 per cent of rehabilitation applications arrived at Ilmarinen in electronic form.  

Pension applications arriving online are processed quickly at Ilmarinen. At our fastest, we can issue a pension decision in just four minutes. We process every third pension application completely automatically. Automation, fast pension decisions and digital services have been made possible by the new pension processing system, which was modernised between 2015 and 2017.

The partial early old-age pension, which entered into force in 2017, raised much interest. During the year, we made close to 3,000 pension decisions concerning partial old-age pension.”
Nina Bruun, Head of Pensions

Customers & services

around
70 %
of rehabilitees return to work

In 2017, Ilmarinen focused on building a better working life together with its customers, more actively than ever before. During the year, Ilmarinen had 2,300 work capacity management projects underway together with its client companies. These projects covered around 135,000 employees insured with Ilmarinen.

Co-operation with clients is always systematic, goal-oriented and measurable and the projects are targeted at jointly identified development areas to reduce disability risks and promote a better working life. A total of 44 coaching sessions and webinars based on the Better Working Life concept were also organised for customer companies around Finland. They attracted a record number of participants, about 3,000.

Our digital Better Working Life package developed quickly last year. As a whole, Luotaamo offers a 360° view of the state of well-being among entrepreneurs, a company’s personnel and the entire organisation, using, for example, the Parempi Vire mobile app and agile surveys. Valmentamo provides support for solving the issues raised by Luotaamo. Valmentamo offers inspiring coaching, combining digitalisation and the competence of our experts. Ohjaamo (Virtual Control Room) is the nerve centre for better work capacity management. Ohjaamo provides an overview of work capacity management.

Last year, we created for our customers new online courses and training programmes and a Työvire survey. In addition, we collected 100 good deeds for a better working life in honour of Finland’s centennial.

We support the management of disability risks in our client companies through vocational rehabilitation. In 2017, approximately 3,500 vocational rehabilitation applicants received confirmation of support from Ilmarinen for changing careers or returning to work. More than 7,000 benefit decisions related to rehabilitation were made in 2017, which was an increase of more than 10 per cent on the previous year.

Co-operation with clients is always systematic, goal-oriented and measurable and the projects are targeted at jointly identified development areas to reduce disability risks and promote a better working life.” Kati Huoponen, Head of Work Capacity Services

Investments

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.

2017 was an excellent investment year for Ilmarinen: investment returns stood at 7.2 per cent. Economic development in all of the main market areas was positive and, thanks to improved corporate earnings, equity investments performed particularly well. Our solvency grew even stronger, which will also serve as a buffer against market volatility in tougher times.

In the new year, the focus is especially on the fixed income markets and the long, historically low interest rate level is expected to begin moving. Read more about the investment year’s events and the markets’ expectations in CIO Mikko Mursula’s interview.

Equity investments performed extremely well in all the main markets, partly due to exceptionally good economic growth. We were also successful in our selection of equities and sectors. Our overall allocation based on a long-term investment strategy worked well as a whole.”
Mikko Mursula, Chief Investment Officer

Personnel matters

Ilmarinen’s personnel perform 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 employees are proud of their work and supervisory work is at a good level. A positive applicant experience raised Ilmarinen to second place in the Responsible Summer Job competition. Absences due to illness continued to fall.

Also from the personnel’s viewpoint, the latter part of the year was marked by preparations for Etera’s merger with Ilmarinen. In accordance with its strategy, Ilmarinen wishes to achieve a successful merger with a positive energy. This requires the entire work community to be geared towards identifying and implementing the benefits of the merger. We are capable of working smoothly also in new configurations and make sure to maintain a positive mood throughout the day.