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Principles of investment and debt financing

Approved by the Supervisory Board on 11 April 2024.


Investment principles


In order to safeguard its liquidity and offset any changes in unemployment insurance contributions due to cyclical fluctuations in the national economy, Employment Fund maintains a business cycle buffer accrued on the basis of the difference between the Fund’s assets and liabilities. Employment Fund’s assets must be invested in a productive and secure manner with a special emphasis on maintaining the Fund’s liquidity.

Investment period

Employment Fund must be prepared for any scenarios where an economic downturn could lead to the liquidation of the Fund’s entire investment portfolio, and even in a relatively short amount of time, so the Fund’s investment period can be very short term in nature.

Risk-taking and profit objectives

Employment Fund’s basic objective is to safeguard its liquidity while aiming to offset any changes in unemployment insurance contributions. To ensure the success of this primary objective, the Fund’s investment assets cannot be subjected to high-return mandates at the expense of their security. A particularly difficult scenario is one where investment assets acquired in an economic upturn would have to be liquidated in a downturn. For this reason, the diversification of the Fund’s investments must focus on the combined ebbs and flows of the capital market, the national economy, and employment figures. The security and risk assessment of an investment object must always place particular emphasis on the preservation of the real value of said object.

Strategic allocation

The selection of strategic allocation constitutes the key factor in profit and risk determinations. When dealing with a short investment period and a limited willingness to take risks, the allocation should emphasise more stable asset classes and a good level of diversification. 

Detailed policies

Employment Fund’s investable assets must be invested primarily in money market investments and bonds.

Up to one fifth of the Fund’s investable assets may be invested in shares.

To safeguard its liquidity, Employment Fund must maintain an amount that is equal to at least one month’s expenses for any fixed-income investments with a maturity of less than one year.

Employment Fund’s deposits must be made primarily in banks supervised by the Finnish Financial Supervisory Authority (including any branches). However, when necessary, the Fund may make deposits in other banks (and their branches) if they are supervised by a reputable financial supervisory authority.

Investments may be made primarily in OECD countries.

The value of the Fund’s investments must be monitored regularly.

The storage of the Fund’s securities must be arranged securely.

The Board of Directors has the right to approve individual asset management services for use in the Fund’s investment activities. The asset manager must be sufficiently solvent, well-known and of good repute, and they must have a licence granted by a supervisory financial or investment market authority operating in the EU region. The asset management agreement must be consistent with Employment Fund’s current investment plan.

Sustainability in investing

Similarly to its other areas of operation, Employment Fund’s investment activities comply with the principles of sustainability and social acceptability.

In the context of Employment Fund’s investment activities, “sustainability” refers to the Fund’s objective of investing in a productive and secure manner so that it can uphold its responsibility of financing expenditures under its financial responsibility, such as unemployment and adult education benefits.

In practice, sustainability in investment activities means taking sustainability issues into account when making investment decisions. In turn, we believe that this will allow us to improve the return/risk ratio of our investments. This approach emphasises various factors, such as ESG (Environment, Social and Governance) issues and exclusion criteria for companies whose operating methods have been deemed irresponsible.

Employment Fund regularly monitors the sustainability of its investments.

Employment Fund’s Board of Directors decides annually on the principles of sustainable investments, in connection with its decision on the following year’s investment plan.

Investment plan

Employment Fund’s Board of Directors is responsible for drawing up an annual investment plan. This plan must include general diversification targets for the assets to be invested, liquidity and return targets for investments, and any necessary investment restrictions, including restrictions on investments in individual risk concentrations.

Debt financing

Under the law, Employment Fund may borrow to finance its expenditures. The Fund’s primary method for meeting its statutory obligations is to set unemployment insurance contributions to an adequate and correct level. The Fund may take out debt as a secondary measure.

Should the Fund’s entire business cycle buffer end up in a debt position, this situation will be seen as a temporary period lasting a few years at most, after which the buffer will be restored into a positive asset.

The Board of Directors is responsible for drawing up an annual debt management plan. The Board of Directors must use this debt management plan to decide on how debt may be raised when necessary and how it will be managed in a cost-effective and secure manner.

Investments and debt financing: organisation, decision-making powers, and reporting

Organisation and decision-making powers

Employment Fund’s Board of Directors is responsible for deciding on the investment of the Fund’s assets and the Fund’s borrowing activities.

The Board of Directors decides on the principles applicable to borrowing, and it also approves the Fund’s loan agreements.


The Employment Fund’s Board of Directors must report on the Fund's investment and financing activities and their status to the Supervisory Board at its annual spring and autumn meetings, and at other times whenever necessary. 

After the Board of Directors has verified and updated the investment plan, the principles of sustainable investment, and the debt management plan, they must be immediately submitted to the Chair of the Supervisory Board and the Fund’s auditor.

Page updated: 24/4/2024