Finland’s State Pension Fund, VER, has posted a return of 6.7% for 2016, with profits on infrastructure and real estate outpacing those of the fund’s other investment classes, according to the fund’s annual results.The return is up from 4.9% in 2015.Infrastructure was the strongest performer last year, returning 13.8%. Real estate gained 11.9% for the fund.Timo Viherkenttä, VER’s chief executive, said: “Aside from infrastructure and real estate investments, the strong performance in 2016 was aided, in particular, by fixed-income investments in emerging markets.” The market’s positive mood had held up this year so far, he said.“A carefully diversified investment portfolio is a sound precaution in view of the choppy seas created by positive macroeconomic news on the one hand and political uncertainties on the other,” Viherkenttä said.The pension fund said its average nominal rate of return over the past five years is 7.4%, and 6.3% in real terms.VER’s investment assets increased to €18.8bn at the end of December from €17.9bn at the end of 2015.Last year, the funding ratio of the state pension system was more than 20% for the first time in history, VER said.The fund, which contributes the equivalent of 40% of the Finnish state’s total pension spending to the government’s annual budget each year, transferred around €1.8bn last year, and received about €1.5bn in pension contribution income.Meanwhile, Keva, the Finnish municipal pension fund, said it has started work on revamping its investment strategy. It said this was a necessary change given that returns are predicted to be much lower in future.It has reported a return of 7.4% for 2016, however, which CIO Ari Huotari said was “tremendous”, and had been bolstered by a 14.5% profit on private equity.Huotari said 2017 would be the first year in the system’s history that pensions paid out would exceed pension contributions. “On top of this, investment return expectations for the next few years are significantly lower than before,” he said.“Because of this, at Keva we have been working on our new investment strategy,” Huotari added.In 2016, listed equities produced an 8.8% return, fixed income 6.5%, real estate 5.0%, and hedge funds 3.6%, according to Keva. The value of Keva’s investments grew to €48.6bn at the end of last year, from €44.9bn the year before.