Page 4 - Seafarers_pension_fund_annual_and_sustainability_report_2023

CEO’s Review
Operating Environment
In 2023, central bank interest rates contin-
ued to rise, and in the early part of the year,
there was even a minor banking crisis in
the USA. Towards the end of the year, there
was a new escalation of geopolitical risk in
the Middle East. Investment returns, espe-
cially in the latter part of the year, increased risks and solvency. We conducted long-
significantly as inflation began to slow
down, and central banks were expected to
cut interest rates significantly during 2024.
The economic development in Finland
was very sluggish. As Finland’s debt is
variable-rate, the rise in interest rates
quickly reflected on financing costs. Fin-
land technically entered a recession as
the development in the construction and
forestry sectors deteriorated sharply.
In terms of maritime transport, do-
mestic passenger traffic has recovered to
pre-pandemic levels. The price level of
maritime freight was low at the beginning
of the year but has returned to the long-
term average level. The most significant
risks are related to geopolitics. There is a
risk that the conflict in the Middle East
will escalate, which could affect the price
of oil and complicate, for example, mari­
time transportation between Asia and
Europe, leading to an upward impact on
inflation. There are also risks in Asia, par-
ticularly concerning Taiwan and Korea.
If the geopolitical situation were to deteri- Future Outlook
orate further, it would have significant
effects on economic growth.
Key Actions
We continued to develop our ORSA (Own
Risk and Solvency Assessment) to assess
term scenario analysis related to, among
other things, the development of premium
income and investment returns. The key
observation was that it is justified to con-
tinue the increase in the proportion of
liquid investments (41.4 %). In this regard,
we particularly started portfolio manage-
ment of listed investments and initiated a
system acquisition to improve risk man-
agement, with the aim of implementing it
during 2024. We increased the number of
banks through which we manage payments,
ensuring, among other things, the payment
of pensions in exceptional situations. The
implementation of the long-term invest-
ment strategy was continued, and the focus
of investments was further shifted from
real estate to liquid investments. The sale
of residential properties continued in early
2023, and the direct real estate allocation
decreased to 14.8 %. The fixed income port-
folio was increased to 6.4 %, and the allo-
cation to listed equities rose to 32.1 %.
”In terms of maritime
transport, domestic
We joined the International Seafarers’ passenger traffic has
Welfare and Assistance Network (ISWAN), recovered to pre-
which provides tools, services, networks, pandemic levels.”
and research information to promote the
well-being of seafarers. At the end of 2023, Seafarers’ Pension Fund | Annual and Sustainability Report 2023 4
we became an observer member of Pen-
sionsEurope. Following the sustainability
reporting directive issued by the EU Parlia-
ment, Seafarers’ Pension Fund has an obli-
gation to audit sustainability reporting for
investment activities from 2026 onwards.
We have begun preparations for its imple-
mentation. The pension calculation and
insurance information systems of the
pension industry will be renewed during
the period 2024–2027. We have initiated
the development of an artificial intelli-
gence strategy aimed at improving custom-
er and employee experience and enhancing
operational efficiency. We are preparing
for changes in the pension system by in-
creasing liquid investments in portfolio
changes.
Helsinki, March 2024
Jari Puhakka
CEO