Annual Report 2014


Varma’s financial trends

Varma’s total result at fair value stood at EUR 1,223 (1,558) million. The total quarterly result varied during the financial year, such that the second-quarter result was the strongest and the fourth-quarter result the weakest. 

Varma’s solvency strengthened during 2014 by EUR 1,112 million, and at the end of the year, solvency capital amounted to EUR 10,252 (9,140) million. Varma’s solvency ratio, i.e. solvency capital in relation to technical provisions, is the highest among the main earnings-related pension companies, at 34.0 (31.6) per cent. Solvency capital was at a strong level: 2.2 (2.2) times higher than the solvency limit. The solvency limit is changed in accordance with the risk level of the investments. Varma’s strategic goal is to maintain the company’s strong solvency through stable returns and operational efficiency. 

The return on investments at fair value was EUR 2,699 (3,160) million, which represents 7.1 (9.0) per cent of the invested capital. The interest credited on the technical provisions was EUR 1,573 (1,648) million. Thus, the investment result for 2014 totalled EUR 1,125 (1,512) million. The average annual nominal return on Varma’s investments over five years was 6.4 per cent, and over ten years 5.5 per cent, both of which figures are the highest in the sector. Operating expenses were 25 (24) per cent lower than the expense loading included in insurance contributions, and the loading profit stood at EUR 33 (32) million. The underwriting result was EUR 64 (15) million.

At the end of 2014, EUR 117 (105) million was transferred to the provision for current bonuses reserved for client bonuses. The transfer represents roughly 0.7 (0.6) per cent of the estimated payroll of the insured.

The TyEL payroll of those insured by Varma totalled about EUR 17.8 (17.8) billion in 2014. The payroll is estimated to have grown by 0.3 per cent. Varma’s premiums written totalled EUR 4,344 (4,258) million, of which TyEL insurance accounted for EUR 4,150 (4,071) million and YEL insurance for EUR 193 (187) million.

At the end of the year, 527,140 (531,210) individuals were insured by Varma. At the end of the year, the number of valid insurance policies totalled 66,140 (66,740), covering 38,937 (39,810) self-employed persons and 488,190 (491,400) employees.

During the year, a total of 3,443 (3,796) new TyEL insurance policies and 4,875 (5,340) YEL insurance policies came into force at Varma.

Earnings and employment notifications received during the year totalled 1,631,284 (1,483,634), of which 93 (92) per cent were received electronically.

Varma provides policyholders with services through its own service channels and through the service networks of If P&C Insurance Ltd and the Nordea Group.

In 2014, a total gross amount of EUR 5,010 (4,787) million in pensions was paid out. The number of pension recipients increased, and at year-end, Varma was paying TyEL and YEL pensions to 334,500 (333,700) people.

A total of 21,051 (23,937) new pension decisions were made during the year. The number of new pension decisions decreased 5.8 percent and the total number of all pension decisions was 5.1 per cent lower than in 2013. Old-age pension decisions numbered 11,548 (11,514), and disability pension decisions amounted to 5,107 (5,461). The number of part-time pension decisions stood at 711 (1,052). Continuation decisions on temporary pensions totalled 4,631 (4,782), and other decisions numbered 14,846 (13,131). These include decisions and preliminary decisions required as a consequence of the changes in pension rights.

Vocational rehabilitation is an alternative to disability pension, and the number of rehabilitation cases at Varma increased again. Rehabilitation has proven to be successful, as currently about 72 per cent of those who receive Varma’s rehabilitation return to the job market either in full or partly. Varma has for years been a forerunner in vocational rehabilitation. Throughout 2014 Varma assisted its client companies in managing personnel risks through client-oriented co-ordination of well-being-at-work services, rehabilitation services and pension-decision services in order to support the management of pension costs and longer careers. Varma also contributed to the costs of customers’ workability management projects in accordance with jointly agreed and often multi-year plans and contracts.


Varma’s eServices for customers has become a major means of providing services. During the year under review, 75.6 per cent of all private customer contacts took place online. Through Varma’s eServices, the insured can obtain the most recent estimate of their old-age and part-time pensions at various retirement ages, apply for a pension, and follow the progress of the application.

Varma sends a pension record to the insured once every three years. A total of 226,093 (235,287) such pension records were sent out in 2014. The record shows information on earnings that apply to pension as well as the pension that has accrued until the end of the preceding year. The pension record is also available via Varma’s eServices.