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YEAR CONTENTS 3 ELO 3 9 FINANCIAL STATEMENTS 9 65 CORPORATE GOVERNANCE 65 Elo – the preferred employment Board of Directors’ report 9 Corporate Governance Statement 65 pension company 3 Accounting policies 16 Chief Executive Officer’s review 4 Board of Directors 70 Profit and loss account 20 Illustrated summary of Elo’s Supervisory Board 73 Balance sheet 21 operations 2015 6 Executive Group 74 Cash flow statement 23 Tax footprint shows amount Executive Group of Investments 74 Notes to the profit and loss of taxes benefiting society Medical insurance specialists 75 account 24 as a result of Elo’s business 7 Auditor 75 Responsibility for each Notes to the balance sheet 28 customer is at the core Group structure 48 of our strategy 8 Elo’s risk management 49 Board of Directors’ proposal on the disposal of profit 56 Key figures 57 Guide to key figures 62 Auditor’s report 64 2 CONTENTS ELO FINANCIAL STATEMENTS GOVERNANCE ELO – THE PREFERRED EMPLOYMENT ELO PENSION COMPANY ELO MUTUAL PENSION INSURANCE COMPANY is a customer-owned employment TIIVISTELMÄSUMMARY OF KEYTUNNUSLUVUISTA FIGURES 2015 2014 pension company that manages the statutory employment pension security for em- Company size ployees in its client companies as well as for self-employed persons. Our business Premiums written, EUR million 3,157.1 3,022.9 serves to support growth among our customers and we believe that wellbeing in the Pensions and benefits paid to pensioners, EUR million 2,857.6 2,731.9 workplace is a prerequisite for such growth. Pensions and other benefits paid, EUR million *) 3,146.8 3,057.0 We are Finland’s most popular employment pension company: one in three com- Technical provisions, EUR million 17,849.7 17,078.6 panies and over 40% of self-employed persons in Finland have selected Elo to Equalisation provision, EUR million 461.6 463.0 Investment assets at fair value, EUR million 20,513.6 19,615.8 manage their employment pensions. We are responsible for the future pensions TyEL payroll, EUR million 11,258.1 11,025.9 of approximately 500,000 employees and self-employed persons, we provide cur- YEL earned income sum, EUR million 1,888.0 1,937.1 rent pensions for about 217,000 pension recipients, and we manage investment Number of TyEL policyholders 46,000 46,100 Number of TyEL insured 398,200 398,100 assets totalling EUR 20.5 billion. Number of YEL policyholders 85,100 87,400 We are a young company, but we incorporate a long tradition: Elo began operations Number of pensioners 216,800 217,400 on 1 January 2014 when Pension Fennia was merged with LocalTapiola Pension. Personnel (average work contribution) 458 448 Result Loading profit, EUR million 36.2 31.8 Operating expenses as % of loading component 71.4 74.3 Solvency capital, EUR million 4,042.1 4,084.0 % of technical provisions 24.1 25.8 SELF-EMPLOYED PERSONS INSURED excl. equalisation provision 21.4 22.9 ratio to solvency limit 2.0 2.1 excl. equalisation provision 1.8 1.9 Net investment income on capital employed, % 5.0 6.2 *) Claims paid in the profit and loss account excluding administrative costs of 85,100 claims handling and working capacity maintenance activities. INVESTMENT ASSETS INSURED EMPLOYEES PENSION RECIPIENTS 20.5 398,200 216,800 billion euro GOVERNANCE 3 CONTENTS ELO FINANCIAL STATEMENTS GOVERNANCE WE MADE ELO EVEN BETTER FOR OUR CUSTOMERS Elo’s second year of operation, 2015, was a success in employment pension companies. It is important for us ket returns, which remained modest worldwide in nearly many ways. We performed our core task – managing pen- that our customers should not have to experience an all asset classes. Elo’s overall return on investments sion provision – efficiently and we retained our strong mar- interruption in income when they retire. reached 5.0 per cent. By the end of the year, Elo’s in- ket position. In what was globally a difficultyear for in- Despite the disruptive effects of major IT system vestment assets had increased to EUR 20.5 billion. vestment, we were able to secure our solvency and projects in 2015, our operations were cost-effective, As an employment pension company our sights ex- we achieved a stable return on our pension assets. which guarantees competitive premium discounts for tend decades ahead. In our investment operations, I took up the duties of Chief Executive Officer at the our customers. Elo’s competitiveness will further im- what is more important than individual years is the start of June, succeeding Lasse Heiniö, who had led prove in the future, when the full benefits of the merg- need to ensure a good long-term return that will en- Elo during its initial period. I was glad to see that we er begin to be felt. able us to finance future pensions. Our five-year av- have succeeded well in building the new company, and erage real return was 3.0 per cent, and the ten-year in some areas we have even exceeded expectations. GLOOMY YEAR FOR THE ECONOMY average real return 3.0 per cent. Elo is Finland’s most popular employment pension The year was eventful and challenging for the econo- Elo’s solvency in 2015 was at a good level. company: with employment pension insurance taken my, globally and in Finland. Growth in the global econ- out by 46,000 employers and the pension insurance omy remained lower than anticipated, at about 3 per COMPETITIVENESS THROUGH of 85,100 self-employed persons, we are the market cent. Among the major economies the euro area and WELLBEING AT WORK leader in the number of TyEL and YEL insurance pol- Japan saw a slight recovery compared with the previ- The current economic conditions are also challenging icies. Altogether, we are responsible for the pension ous year’s figures. for many of our client companies. We aim to strength- provision of almost 500,000 employees and self-em- Unfortunately, the Finnish economy did not expe- en our customers’ competitiveness by focusing on ar- ployed persons. This represents a great show of trust rience the rise that was seen in the rest of the euro eas that support this, namely corporate financing and from our customers, and we take this very seriously. area. Our economic problems stem from the domi- workplace wellbeing services. During the year, we brought to completion the IT sys- nance in manufacturing of sectors that focus on in- During 2015 Elo’s development work focused par- tem projects that were put in place following the merger. vestment goods and production goods, and from the ticularly on our workplace wellbeing services for help- Now we can concentrate more effectively on developing weak competitiveness of exports and the contraction ing client companies to develop and safeguard the our services. Managing our core task and providing a in trade with Russia. The economy has for years now working capacity and functional ability of their person- seamless service to customers are naturally the prior- been below par in all the main production sectors – nel. Our workplace wellbeing services are very signifi- ities of our work, and this remained so throughout the manufacturing, construction and services. Indeed, a cant for our client companies and also for society as internal reorganisation as well. For example, we were key talking point all year was how the situation can a whole. Sickness absences and incapacity for work able to further speed up to the process of handling be turned around so that growth and new jobs can be together represent an annual cost of billions of euros pension applications, which means that also in 2015 found for Finland. to the private sector in Finland. Elo alone paid disabil- pension applicants received a decision from Elo con- The considerable uncertainty surrounding economic ity pensions of more than EUR 300 million in 2015. siderably quicker on average than is the case in other growth expectations was reflected in investment mar- 4 CONTENTS ELO FINANCIAL STATEMENTS GOVERNANCE We have set up a new online workplace wellbeing service for our customers, which enables us to offer val- uable support particularly to many small and medium -sized companies. OUR GOAL IS TO The Financial Supervisory Authority carried out an inspection of employment pension companies’ well- PROVIDE THE BEST being at work activities and of the financing of relat- CUSTOMER EXPERIENCE ed projects by the employment pension companies in 2015, and on that basis it reviewed its guidance IN THE SECTOR, on operations to manage disability risk as of March IN CONJUNCTION WITH 2016. Clear rules on disability risk management will OUR PARTNERS. be welcome, in our view. EQUIPPED FOR THE FUTURE The pension reform bills were approved in January 2016. The aim of these legislative changes, which are experience in the sector, in conjunction with our part- due to come into effect at the start of 2017, is that ners, Fennia, LocalTapiola and Turva. people should remain in employment for longer and The outlook for the economy in 2016 that the sustainability gap in public finances should is in many ways contradictory. On the in- be reduced. In the coming years, the changes brought vestment markets the year started in an by the pension reform will represent a major project exceptionally uncertain mood. The Finn- for us at Elo and for the entire employment pension ish economy started to grow slightly at sector, both in terms of work input and financially. Elo the end of 2015, but no significant im- was involved in the preparatory work for the legislative provement in the outlook is yet in sight.

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