Fostering Pension Fund Capitalism Without Financializing Pensions? The Evolution of Policy Ideas in Finnish Pension Fund Investments

Abstract

The promotion of pension fund capitalism has been considered an intrinsic part in the financialization of European pension systems. The evolution of Finnish pension system challenges this relationship: Finnish pension funds have embraced the idea of international portfolio management, but this shift has not been accompanied with path departures in pension policy. The case calls for more nuanced analyses of gradual political shifts in the ‘asset side’ (i.e. investment policy) of different varieties of pension fund capitalism and the relationship with the shifts in the ‘liability side’ (i.e. pension benefits) of pension politics. The paper studies the evolution of policy ideas over investments in the Finnish mandatory earnings-related pension scheme for private sector employees. The descriptive analysis reveals a gradual ideational shift from neo-corporatist style national economic development focus to an international portfolio management driven investment focus. Moreover, the ideas leading to new investment policies have been only periodically coupled with pension policy issues.

Keywords: Finland, pension fund capitalism, pension politics, policy ideas