The average nominal return on investments over the past 10 years is now 5.5% per year.Varma said its investment returns developed strongly during the first half of the year, but uncertainty in investment markets caused the result to fluctuate considerably during the second half.The last quarter in particular was very turbulent.Reima Rytsölä, CIO at Varma, said: “The investment result was improved by a fairly strong focus on the US markets. Instead of a stagnant Europe, we were involved in a growing economy.”Returns were generated consistently across the different asset classes.Equities – which make up 41% of the portfolio, including 32% in listed stocks and 6% in private equity – were the best performers, with a 9.1% return (21.8% in 2013).The decline in interest rates ensured the return on fixed income investments was also good, at 5.5% (compared with 1.2% in 2013).At end-2014, fixed income made up 30% of investments.Returns were also boosted by hedge fund investments, which returned 7.8%, compared with 8.8% in 2013.The weighting had been increased early in 2014, taking the allocation to 17% by end-2014, compared with 13% the previous year.Real estate returned 3.8% over 2014, increasing from 3.1% the year before. The asset class made up 10% of the portfolio at end-2014.Rytsölä said: “It is realistic to expect lean times for investors. Interest rates are hovering around zero, and if economic growth does not pick up, the return on equities might also remain modest.”The company warned that the economic environment remained challenging for Finland.It said the change in the value of the euro and the drop in the price of oil would promote growth this year and next.But growth forecasts remain moderate with respect to recent history, and for investors, the interest rates especially are dramatically low.Risto Murto, president and chief executive at Varma, said: “We are used to a situation where low interest rates reflect a strong economy and stable currency, but that is not the case now. The record-low interest rate levels indicate economic problems, not strengths.”Meanwhile, during 2014, the company wrote premiums totalling €4.3bn and paid pensions of €5bn. Varma Mutual Pension Insurance, Finland’s largest earnings-related pension insurer and private investor, has announced a return on investments for calendar 2014 of 7.1% (€2.7bn), taking its solvency to a record high level.By the end of last year, its investment portfolio had reached €40bn – again, a record high – from €37.7bn the year before, while solvency capital was at €10.3bn, compared with €9.1bn at end-2013.This meant solvency capital amounted to 34% of technical provisions (31.6% in 2013).However, returns were lower than the previous year’s €3.2bn (9%).