Unemployment Insurance Fund Financial Statement Release 21 March 2017 at 11:00
Unemployment Insurance Fund's (TVR) Financial Statement Release for 2016
The Unemployment Insurance Fund's result for the financial year 2016 showed a surplus
- Unemployment insurance contributions and other income in total EUR 4,083 (3,330) million
- Unemployment benefits paid and administrational expenses in total EUR 3,859 (4,002) million
- Change in net position (for the financial year) EUR 220 (-677) million
- Net position EUR -466 (-686) million
- Investments and assets in total of EUR 704 (604) million
- Raised debt and other loans EUR 1,170 (1,290) million
- Unemployment rate on average 8.8% (9.4%)
- Return on investments 0.3% (0.2%)
The figures for 2015 are given in parentheses.
Managing Director Janne Metsämäki:
Employment trends and higher contributions resulted in increased Fund earnings
The Unemployment Insurance Fund's result for 2016 turned into a marked surplus, even though during the budget preparations it was estimated that the Fund would show a major deficit. The change was driven by the halt and the subsequent downturn in 2016 in unemployment, as Finland's economy returned to slow growth after a slump that had lasted several years. The Fund published several releases about the changed revenue forecasts in 2016.
In 2016, Finland's gross domestic product grew by an estimated 1.6 per cent. The unemployment rate decreased by 0.6 percentage points year on year. The Fund's financial result was EUR 220 million in surplus. The Fund's expenses decreased by 4 per cent while income increased by 23 per cent. The higher unemployment insurance contributions, entered into force at the beginning of 2016, had a significant impact on the increase in income. In 2016, the Fund's earnings-related benefit expenses and other benefits were financed by the unemployment insurance contribution without additional borrowing.
While the Fund's business cycle buffer remained negative in 2016, by the end of 2016 surplus revenue had decreased the buffer deficit to EUR 466 million. Return on the Fund's investments was 0.3 per cent in 2016, which can be considered a good result, taking into account the Fund's cautious investment policy and the negative interest rate environment.
The Fund's credit rating, granted by Standard & Poor's, was renewed in early 2016. The Fund's credit rating normally follows the government rating for Finland. In 2016, the Fund prepared for the renewal of its credit facility and the related government guarantees, which will take place during the first half of 2017.
As an issuer of bonds, the Fund must comply with the requirements of the Securities Markets Act. In early 2016, the Fund's Board of Directors approved the insider regulations, which were updated in accordance with the Market Abuse Regulation that entered into force in July 2016.
The targets set for the determination and collection of unemployment insurance contributions were achieved in 2016. The level of customer service related to insurance contributions remained high throughout the year, and the Fund achieved its objective of increasing electronic service provision in wage sum reporting. The amount of collected liability components increased markedly year on year.
The Competitiveness Pact concluded by the national labour and employer confederations will result in several changes at the Fund. From the beginning of 2018, employee and employer unemployment insurance contribution rates (average contributions) will be equalised. At the same time, the composition of the Fund's administration will change. The maximum level of the Fund's business cycle buffer was temporarily increased to correspond to the annual expenses arising from an unemployment rate of 7 per cent. The amendments of the law were approved by Parliament in the second half of 2016. The Competitiveness Pact includes a clause on the provision of a government guarantee for the Fund's debt financing without counter securities or guarantee payments.
The Fund continued to develop its information systems and prepared for the deployment of a new insurance contributions system. With regard to the preparations for the national income register, the Fund will participate in the first phase, set to be launched in 2019.
In 2016, the Fund performed well in its statutory and other tasks. The Fund's personnel deserve a great praise for this. Year 2016 saw the Fund preparing for and implementing diverse development projects. The Fund carried out a survey of its operational culture and prepared for the follow-up measures. Together with its employees, the Fund defined its values. According to them, we seek to achieve an Unemployment Insurance Fund which encourages reform and operates consistently with an uncomplicated service provision.
Janne Metsämäki Managing Director
Key figures
| EURm | 2016 | change % | 2015 | ||
| Unemployment insurance contribution income * | 4 083 | 23 % | 3 330 | ||
| Other income (MSAH) | |||||
| Contribution rates | |||||
| employee contribution % | 1,15 | 77 % | 0,65 | ||
| employer, base % | 1,00 | 25 % | 0,80 | ||
| employer, large firms | 3,90 | 24 % | 3,15 | ||
| Benefits payments total | 3 859 | -4 % | 4 002 | ||
| Unemployment funds (UIF) | 1 581 | -7 % | 1 703 | ||
| Unemployment funds (MSAH) | 1 102 | -4 % | 1 142 | ||
| Finnish Centre for Pensions | 846 | -6 % | 900 | ||
| Education Fund | 116 | 18 % | 98 | ||
| Social Insurance Institution of Finland (Kela) | 168 | 39 % | 121 | ||
| Ministry of Employment and the Economy | 23 | 10 % | 21 | ||
| State Pensions Fund | 11 | 43 % | 8 | ||
| Administrative expenses | 11,7 | 21 % | 9,7 | ||
| Change in net position | 220 | -677 | |||
| Investment return % | 0,3 | 0,2 | |||
| Net position | -466 | -686 | |||
| Money market investments | 262 | 27 % | 207 | ||
| Fixed income investments | 359 | 48 % | 242 | ||
| Borrowings, debt outstanding | -1 023 | -1 109 | |||
Financial Statement Release 2016 This Stock Exchange Release is a consent of TVR's Financial Statement Release 2016 ja consists the most relevant information of that Release. Financial Statement Release 2016 is published in full as a pdf file attached to this Release and is also available in TVR's web site at tvr.fi The Financial Statement Release 2016 is unaudited.
Financial releases in 2017
Annual report 2016 is published in TVR's web site on 22 March 2017. The Interim report for the period 1 Jan - 30 Jun 2017 will be published on 29 August 2017.
Additional information:
Janne Metsämäki, Managing Director. tel. +358 40 522 3614 Tapio Oksanen, Deputy Managing Director, CFO tel. +358 40 539 4651
Helsinki, 21 March 2017
Unemployment Insurance Fund (TVR)
Tapio Oksanen Deputy Managing Director
Distribution: NASDAQ OMX Helsinki Media www.tvr.fi
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