Finnish Pension Funds Rejig Holdings in Bet on Stocks-Led Boost

Finnish pension funds are starting to sell lower-yielding assets classes in anticipation of a reform that will enable them to increase their stock holdings. With the country’s ranks of pensioners steadily rising — and the country’s public coffers in need of a cash infusion — it’s a bet on equity delivering higher returns than real estate and infrastructure.

Varma and Ilmarinen, Finland’s two biggest private retirement money managers, have in recent weeks announced large real estate divestments, and the latter also sold a stake in Finland’s national grid. Under the new pension rules, which will go into effect next year, funds will be permitted to boost equity weights to about 70% of their portfolios, up from the current average of about 55%.