Annual Report 2014


Varma secures pensions

Varma's core task is to secure pensions. This also provides the basis for our key strategic objective of maintaining good solvency under all circumstances.

Varma secures pensions

Varma's core task is to secure pensions. We take care of the statutory pension cover of entrepreneurs and private sector employees. We invest the assets collected as pension contributions profitably and securely for current and future pensions.

Approximately 66,000 companies and entrepreneurs have entrusted Varma with handling their pension coverage.

The core task is based on legislation, and it forms the foundation for our operations. Varma’s strategy provides a framework for how we respond to changes in the operating environment and to our customers’ expectations, and how we want to stand out from our competitors.

Strong solvency as a strategic goal

Our core task in itself requires us to invest pension assets profitably and securely. Varma’s strategic goal is to maintain strong solvency under all circumstances. We succeeded well in achieving this key goal also in 2014: at the end of the year, our solvency was at a record-high level, at EUR 10,252 million. Thanks to successful investment years, Varma has been the most solvent earnings-related pension insurance company for several years.

In addition to securing pensions, solvency plays a role in client bonuses, i.e. the contribution discounts given to customers. Varma’s aim is to be able to provide the best client bonuses in the sector, and this goal was achieved in 2014. Thanks to our strong solvency, our client bonuses also reached a record-high level: Varma reserved EUR 117 (105) million from 2014 for client bonuses.

Read more about solvency and client bonuses in other sections of this report.

Several successful investment years have made Varma the most solvent company in the sector.

Support for managing pension costs

Employees’ good workability and well-being support the target of extending their careers. Our goal is that the employees of our client companies are able to cope better and remain in working life longer. We also aim for the lowest pension costs in the sector for our customers.

In addition to client bonuses, Varma is able to influence earnings-related pension costs through its workability management and rehabilitation services, which help companies to control their pension and sick leave costs.

Read more about the results of our operations


Product: earnings-related pension

Earnings-related pension accrues from all work and self-employment. Pension is based on income earned as an employee or entrepreneur, and its purpose is to secure a reasonable standard of living after retirement.

Earnings-related pensions are financed through pension contributions paid by employers and employees and through returns on investment activities. Successful investment activities can help reduce the pressure to increase pension contributions due to, for instance, the aging of the population.

The majority of the pension contributions paid by employers and employees are used to pay pensions in the year in which they are collected. A portion of the contributions is set aside in funds for future pension payments. Approximately a quarter of the pensions under payment are financed through previously collected pension assets and the returns on them. A small portion of the contributions goes towards the operating expenses of the earnings-related pension company.

Part of the investment returns on pension assets is used to strengthen pension liabilities and part is used to maintain the solvency of the earnings-related pension company. Based on the solvency and operational efficiency of the pension company, it may grant client bonuses.

The YEL contribution paid by those who are self-employed is dedicated entirely to paying pensions for the current year, i.e. the assets are not set aside in funds.


Cash flow



Read more about Varma and our services.