2016-03-23 09:01:09 CET
2016-03-23 09:01:09 CET
REGULATED INFORMATION
Työttömyysvakuutusrahasto - Financial Statement Release
The Unemployment Insurance Fund (TVR) : Annual Review and Financial statements for 2015
Unemployment Insurance Fund Financial Statement Release 23 March 2016 at
10:00
Unemployment Insurance Fund's (TVR) Annual Review and
Financial Statements for 2015
1. Annual review
1.1. The Report of the Board of Directors
The Unemployment Insurance Fund's result for the financial year 2015 was still
clearly showing a deficit
· Unemployment insurance contributions and other income in total of
EUR 3,330 (3,031) million
· Unemployment benefits paid and administrational expenses in total of
EUR 4,002 (3,706) million
· Change in net position (for the financial year) EUR -677 (-672)
million
· Net position EUR -686 (-9) million
· Investments and assets in total of EUR 604 (498) million
· Raised debt and other loans EUR 1,290 (507) million
· Unemployment rate on average 9.4 % (8,7 %)
· Return on investments 0.2 % (0,6 %)
Financial information for 2014 is presented in parentheses.
1.1.1 Operational environment of the Unemployment Insurance Fund
Performance of the Unemployment Insurance Fund's finances during the year 2015
was slightly weaker than expected.
UIF's Supervisory Board approved the budget in August 2014 and the deficit for
2015 was expected to be EUR 547 million. The financial statements for the
financial year 2015 is showing EUR 677 million of deficit, which is the largest
amount of annual deficit in the Fund's history. The amount of UIF's business
cycle buffer was negative. The liability in the buffer amounted to EUR 686 (9)
million at the end of the year 2015.
The state of the economy in Finland remained weak in 2015. The gross production
hardly grew at all, exports decreased and employment weakened. The number of
hours worked decreased to some extent and the development of total payroll
amount was weaker than on average. The number of unemployed jobseekers kept
growing significantly during 2015. In its budget, the Fund decided to propose
moderate increases to unemployment insurance contributions for 2015. Despite of
this, the unemployment insurance expenditure under the Fund's responsibility
was covered partly by debt financing, when the margin determined in the business
cycle buffer was used for the first time on the liability side. Based on the
official statistics, the unemployment rate in Finland increased by 0.7
percentage points (from 8.7 % to 9.4 %). The Fund's expenses increased by 8 %,
respectively.
Total additions from ordinary activities of the Fund were EUR 3,330 (3,031)
million and deductions EUR 4,002 (3,706) million. The financial year's deficit
amounted to EUR 677 (672) million.
The planning and managing of the Unemployment Insurance Fund's finances is
largely based on forecasts on the unemployment rate, unemployment expenses and
the development of employment rate and wages. In normal conditions, the Fund
must set the insurance contributions at a level sufficient to cover all
projected expenses.
The unemployment insurance contributions are set for one calendar year at a
time. When the contribution levels are adjusted, the employers' and employees'
contributions are adjusted by the same percentage. The forecast deviation
between the budget prepared in August in the preceding year and the financial
statements that are prepared more than a year later, has been 5 % of the
expenses on average over the last five years. In 2015, the forecast deviation
was smaller than on average.
Liquidity was moderate at the beginning of the year 2015 when the business
cycle buffer and a positive cash flow covered expenses. Since June, liquidity
had to be improved by a significant debt financing.
The uncertainty on the financial markets was reflected in the Fund's investing
activities, with a considerable amount of funds being directed into high-
liquidity, low-yield investments.
Since 2011, the amount of unemployment contributions have been ratified
through a procedure, by which the Unemployment Insurance Fund makes a proposal
for the amounts of the following year's contributions to the Ministry of Social
Affairs and Health by the end of August (Act on Financing of the Unemployment
Benefits, section 18 (6)). This accelerated timetable increases the uncertainty
of the following years economic and unemployment forecast. The unemployment
insurance contribution rates are ratified by Parliament on the basis of the
government proposal. The proposal for contributions can be amended during the
parliamentary proceedings.
Unemployment insurance contribution rates for 2016 were proposed to be increased
On 28 August 2015, the Unemployment Insurance Fund proposed to the Ministry for
Social Affairs and Health an increase to both employers' average and employees'
unemployment insurance contributions of 0.5 percentage points for 2016.
Parliament ratified the government proposal for the above at the end of November
2015.
UIF has adopted IFRS-standards as from the 2014 financial statements. Work
related to adopting IFRS-standards has continued during the 2015 calendar year.
The Fund's administrative expenses
The Fund's administrative expenses amounted to EUR 9.7 (9.3) million. The
effects on administrative expenses of adopting IFRS-standards have mainly been
shown by the capitalization of development costs.
The Unemployment Insurance Fund determined and collected unemployment insurance
contributions for 2015
The determination and collection of unemployment insurance contribution was
transferred from accident insurance institutions to the Unemployment Insurance
Fund at the beginning of 2013. The first year 2013 went operationally well and
the targets were achieved. 2014 was the first year when two year's contributions
were processed at the same time, as the final payments for the last year were
determined in addition to the prepayments. In 2014, the workload increased more
than was estimated and that caused the decline in quality level of service below
the target. The Unemployment Insurance Fund prepared itself for 2015 by
developing its processes by analyzing the last year's information, and by
slightly increasing the number of personnel in determination and collection of
unemployment insurance contributions. The preparations were successful and the
quality level of service exceeded the targets.
The operational and financial targets for the determination and collection of
unemployment insurance contributions were achieved in 2015, as well as in 2014
and 2013. Annual targeted cost savings of EUR 10 million through the transfer of
the collection of the contributions were achieved in 2015 with cost savings of
EUR 9.7 (9.9) million.
Employers' training compensation
Employers can receive tax deductions from the expenses of training their
employees based on the law on training compensation (law related to three
training days). Employers who are not eligible for training-fee-related tax
deductions based on the Business Tax Act or the Agricultural Income Tax Act, can
receive equal deduction from the unemployment insurance contribution. Such
employers are, for example, municipalities, churches and associations.
Entitlement to receive such compensation started from the beginning of 2014 and
the first deduction, based on the employer's application, was issued in 2015,
after the Unemployment Insurance Fund approved the final total amount of
unemployment insurance contributions paid in 2014.
During 2015, the Unemployment Insurance Fund made amends for training
compensations in total of EUR 9.4 million for 468 employers. Total number of
training days stated in the applications was around 480,000. Of the employers
who applied for the training compensation, 225 were cities or municipalities.
1.1.2 Responsibilities of the Unemployment Insurance Fund
Unemployment benefits financed by UIF
Based on the Act on the Financing of Unemployment Benefits (555/1998) and with
regard to the financing of earnings-related unemployment allowances, the
Unemployment Insurance Fund is responsible for expenses from basic unemployment
allowances, employment promotion measures and from job alternation compensations
insofar as the state or individual unemployment funds are not liable for these.
The above-mentioned benefits are paid from the unemployment funds. Adult
education allowance is paid from the Education Fund. In addition, the
Unemployment Insurance Fund is responsible for the unemployment insurance
contributions for unemployed persons and recipients of the adult education
allowance that are paid through the Finnish Centre for Pensions to the
employment pension institutions.
According to the Decree on the Implementation of the Act on Unemployment Funds
(272/2001), the processing of prepayment applications and payment decisions
together with monitoring the sufficiency of the prepayments are under the
responsibility of the Unemployment Insurance Fund. The Fund makes prepayments
to the unemployment funds twice a month, on the first banking day and the
banking day that is closest to the 15(th) day of the month.
The Fund also transfers the prepayments of government contributions to the
unemployment funds on the first banking day of each month. In 2015, the Ministry
of Social Affairs and Health paid the government contributions to the Fund as
fixed monthly payments, unless otherwise proposed by the Unemployment Insurance
Fund. The government contribution is recognized as the Fund's income and
expenses.
In 2015, there were 29 (30) unemployment funds operating in Finland, of which
two served entrepreneurs. The earnings-related unemployment allowance paid by
the unemployment funds was on average EUR 66.63 (67.58) per day.
In 2015, a total of EUR 1,703 (1,651) million was paid to the unemployment
funds for financing the unemployment benefits. In addition, the Fund
transferred EUR 1,142 (1,054) million to the unemployment funds as the
contribution of the Ministry of Social Affairs and Health.
In accordance with the Act on the Financing of Unemployment Benefits, the
Unemployment Insurance Fund is responsible for expenses related to additional
days to the unemployment benefits. The unemployment funds pay additional daily
unemployment benefits, which are not financed by the state, to their members. An
unemployed person is eligible for additional unemployment benefit days if he
or she turns 59 before having reached 500 earnings-related unemployment
allowance days. For those born in 1955 or after, the age limit will rise to 60
years, and to 61 years for those born in 1957 or after.
The Unemployment Insurance Fund has the sole responsibility for financing of the
supplementary allowance and change security supplement of the basic
unemployment allowance. These benefits are paid both by the unemployment funds
and Kela. In 2015, no funds was paid related to the supplementary allowance and
change security supplement. From the beginning of 2015, the way the higher
income earnings-related unemployment allowances are calculated was changed so
that the level of allowances decreases slightly. The same change was carried out
regarding the supplementary earnings-related allowances. These changes were
executed to implement the decision on reduction of basic unemployment
allowances, which was part of the framework decision of the Government. The
change decreases expenses related to earnings-related unemployment allowance. To
implement government savings, the Fund pays the amount of savings (approximately
EUR 50 million) yearly to Kela to be used to finance the basic social security.
Based on the Section 19a of the Act on Unemployment Funds (556/1998), the Fund
pays a membership fee equalization payment to those employee's funds that have
paid significantly more unemployment benefit days in the previous year than the
average per member for all unemployment funds, in order to even out the
unemployment burden prevailing in different industries, within the limits of an
appropriation decided by the Supervisory Board each year. The balance of the
unemployment fund's equalization fund may also be taken into account in
determining the membership fee equalization payment. The Board of Directors of
the Fund has also paid attention to the level of membership fees in relation to
other unemployment funds and to changes in membership fees in the two preceding
years.
In 2015, a total of EUR 10 (10) million was used on equalization payments. The
amount used for equalization was around 0.35 (0.40) % of the unemployment
funds' benefit payments, the prescribed maximum being 0.75 %. The membership fee
equalization payments were made to eight employee's funds as in the previous
year. Changes in the Fund's membership fees in 2015 and 2014 were also taken
into account in the equalization decisions.
Financing of pension accrual of unemployed persons and recipients of job
alternation compensation and adult education allowance
The second largest expense of the Unemployment Insurance Fund has been the
contribution paid to the Finnish Centre for Pensions to cover the liabilities
and expenses arising from taking into account the time of unemployment,
education and job alternation leave (Employees' Pension Act (395/2006), Sections
74 and 182). The amount of this contribution is determined by estimating the
average amount of pension contributions that would be paid for the unpaid
periods that constitute the basis of the accrued pension security.
Based on the estimate of the Finnish Centre for Pensions, the recognized
expense in 2015 was EUR 900 (821) million. The contribution was paid as a
prepayment during 2015. The final contribution for 2015 will be confirmed
afterwards by the Ministry of Social Affairs and Health during 2016.
As stated above, the Unemployment Insurance Fund is responsible for the
contribution provided for in Sections 62 and 133 of the State Employee's
Pension Act (1295/2006) to the State Pension Fund. In 2015, contributions paid
by the Unemployment Insurance Fund amounted to EUR 7.7 (6.1) million. The final
contribution for 2015 will be confirmed afterwards by the Ministry of Social
Affairs and Health during 2016.
Settlement to Kela of income from the unemployment insurance contributions of
employees who are not members of an unemployment fund
Based on Sections 8 and 23 of the Act on the Financing of Unemployment Benefits
(555/1998), the Fund pays to Kela an annual amount from employee's unemployment
insurance contribution income, corresponding to the percentage of employees who
are not members of an unemployment fund. The amount of the settlement is
estimated from data collected by Statistic Finland, and the estimate is
confirmed by the Ministry of Social Affairs and Health. In 2015, the settlement
percentage was 13.5 (14.2). Prepayments amounted to EUR 121 (52) million.
Financing of the Education Fund's benefits and operations
Based on Section 13 of the Act on Education Fund (1306/2002) and Section 30 of
the Act on Adult Education Allowance (1276/2000), the Unemployment Insurance
Fund is responsible for the financing of the earnings-related part of the adult
education allowance and the scholarships, together with the related
administrative expenses. The benefits are paid from the Education Fund. In
2015, the Unemployment Insurance Fund paid to the Education Fund a total of EUR
98 (84) million. The increase in expenses is due to a sharp increase of adult
education allowance expenses.
Financing of pay security
Based on the Section 31 of the Pay Security Act (866/98), the Unemployment
Insurance Fund is responsible for the state's pay security expenses. Pay
security expenses are paid once a year to the Ministry of Employment and the
Economy, based on the invoice sent by the Ministry. In 2015, pay security
expenses amounted to EUR 21 (27) million. The considerable decline in pay
security expenses was due to the declined number of bankruptcies and the
increased amount of collected repayments.
The Unemployment Insurance Fund's role in EU coordination
Article 65 of Regulation (EC) No 883/2004 of the European Parliament and of the
Council on the coordination of social security systems (basic regulation)
provides for situations in which a person becomes unemployed after working in a
Member State other than his or her country of residence.
In Finland, the Unemployment Insurance Fund has been designated as the
competent body when implementing this basic regulation with regard to earnings-
related unemployment insurance. The Fund's responsibilities include the payment
and collection of the compensations provided for in paragraphs 6 and 7 of
Article 65, incurred from basic unemployment allowance paid to the members of
unemployment funds. In 2015, the Fund paid a total of EUR 57,300 in such
compensations and received a total of EUR 73,700.
Determination, collection and supervision of the unemployment insurance
contribution
Unemployment insurance contributions
On 28 August 2014, the Supervisory Board of the Unemployment Insurance Fund made
a proposal to the Ministry of Social Affairs and Health for the amount of
unemployment insurance contributions for 2015.
Employers' contribution percentages increased for 2015, and were 0.80 (0.75) %
of the wages up to EUR 2,025,000 (1,990,500) and 3.15 (2.95) % of the wages for
the part exceeding this. The average contribution percentage was 2.34 (2.20) %.
Unemployment insurance contribution for government enterprises was 0.80 (0.75)
% of the wages up to EUR 2,025,000 (1,990,500) and 2.10 (1.95) % of the wages
for the part exceeding this.
Universities' unemployment insurance contribution was 0.80 (0.75) % of the
wages up to EUR 2,025,000 (1,990,500) and 2.35 (2.35) % of the wages for the
part exceeding this.
Unemployment insurance contribution for part-owners as defined in the
Unemployment Allowance Act was 0.80 (0.75) % of the wages.
Employees' unemployment insurance contribution was 0.65 (0.50) % of the wages,
based on the Fund's proposal. The employee unemployment insurance contribution
of a part-owner was 0.24 (0.19) % of the wages.
Employers' unemployment insurance contributions amounted to EUR 1,626 (1,524)
million, of which municipalities and municipal federations paid EUR 493 (471)
million. Employees' unemployment insurance contributions amounted to EUR 489
(378) million, of which municipalities and municipal federations paid EUR 106
(83) million.
Determination and collection of the unemployment insurance contribution
The Unemployment Insurance Fund determines and collects the unemployment
insurance contributions based on the Chapter 7 of the Act on Financing of the
Unemployment Benefits. The determination and collection of unemployment
insurance contribution was transferred from accident insurance institutions to
the Unemployment Insurance Fund at the beginning of 2013.
During 2015, the unemployment insurance contributions determined by the
Unemployment Insurance Fund amounted to EUR 2.2 (2.0) billion. A total of EUR
93 million of the unemployment insurance contributions were refunded. Assigned
payments were collected comprehensively, 0.24 per cent of the invoices due in
2015 remained unpaid.
Supervision of collection of unemployment insurance contributions
Supervising the fulfilment of the responsibilities related to the unemployment
insurance contributions provided by law is a task of the Unemployment
Insurance Fund. By this supervision, it is ensured that the reported amounts of
salary that determines the amount of employer's unemployment insurance
contributions are accurate and the collected amounts are correct. In addition,
this supervision addresses the failures of payment obligation for unemployment
insurance contributions.
Supervision of the Fund's collected unemployment insurance contributions from
2014 and 2013 was started on 16 November 2015, once the information system for
supervising the collected unemployment insurance contributions was operational.
In 2015, there were around 200 (400) cases taken under the supervision. In
2015, the supervision confirmed a total of EUR 1.2 (3.2) million missing from
the unemployment insurance contribution income.
Employers' liability component in unemployment allowances
The Unemployment Insurance Fund determines and collects the employers' liability
component in unemployment allowances in order to finance elderly long-term
unemployed persons' entitlement to additional days. Basis of the liability
component and the conduct of collection is determined on the Chapter 8a of the
Act on Financing of the Unemployment Benefits (1998/555). In 2015, the
unemployment funds and Kela reported around 12,000 (12,000) new liability cases.
The Fund assigned a liability component compensation to the employer in around
3,000 (2,800) cases.
The average amount of liability component compensations was around EUR 17,000
(19,000). The average processing time in cases that led to payment decision was
74 (73) days. In 2015, 15 (65) employers in total complained about the liability
component payment decision.
Conduct according to the Employment Contracts Act 12:3
According to the Employment Contracts Act, the courts have to hear the
Unemployment Insurance Fund in disputes that relate to the termination of
employment and when the claimant has received earnings-related unemployment
allowance after the termination of employment.
In 2015, the Unemployment Insurance Fund gave around 1,100 (1,000) statements.
1.1.3. The Unemployment Insurance Fund's finances
The Fund's financial net position and business cycle buffer
In accordance with the Section 3 of the Act on the Financing of Unemployment
Benefits, the Unemployment Insurance Fund maintains a business cycle buffer
generated from the difference between the Fund's income and expenses, in order
to safeguard the Fund's solvency and even out changes in unemployment
insurance contributions caused by predictable trend cycles in the national
economy. The maximum size of this buffer is the amount of annual expenses
corresponding to an unemployment rate of five per cent. During times of severe
economic downturn, the Fund may maintain a deficit equal to the amount of
expenditure corresponding to this unemployment rate. The maximum amount of the
buffer is calculated by dividing the Unemployment Insurance Fund's annual
expenditures, EUR 2,860 million in 2015, by the average unemployment rate for
the year (9.4) and multiplying the result by 5. In 2015, the maximum amount of
the buffer, provided for in legislation, was EUR 1,521 million. The
Unemployment Insurance Fund's net assets were EUR -686 million (liability) at
the end of 2015.
According to the investment principles accepted by the Supervisory Board, the
Fund is required to have investments in liquid money market instruments with
less than a year's maturity the amount that equals the Fund's one month's
expenses. This amount is approximately EUR 300 million. Such a liquidity buffer
had to be financed by debt financing during 2015. In the meeting held in spring
2015, the Supervisory Board decided to update the investment principles by
determining recommendations on the duration of indebtedness.
According to the budget for 2016, which was delivered to the Ministry of Social
Affairs and Health, the liability in the Fund's net position would amount to
EUR 1,300 million on 31 December 2016. In preparing the financial statements,
it is estimated that the Fund's net position at the end of 2016 will be around
EUR 1,100 million negative.
Debt financing
The Unemployment Insurance Fund's net position turned to negative in 2014 and
the same trend became stronger in 2015. Accordingly, the Board of Directors of
the Unemployment Insurance Fund approved on 16 December 2014 the debt serving
plan for 2015. The plan was executed actively during the year. In the spring
2015, the Fund made agreements of credit facilities with six major Nordic banks
in total worth of EUR 1,000 million, including a state guarantee from the
Government of EUR 770 million. The credit facility was not utilized during 2015.
The Unemployment Insurance Fun was actively raising debt financing from the
capital markets. In 2015, the Fund issued two publicly quoted bonds with
maturities of 3 and 4 years, in total of EUR 900 million. In addition, the Fund
regularly issued short-term (less than a year) commercial papers on the domestic
markets and thereby strengthened its liquidity. The European Central Bank took
the Fund's bonds under its Public Sector Purchase Programme (PSPP) in July 2015.
Credit rating agency Standard & Poor's (S&P) granted on 21 May 2015 an AA+
rating with stable outlook for the Fund. On 7 October 2015, S&P changed the
Fund's outlook from stable to negative due to S&P's similar change in the rating
of Finnish Government on 25 September 2015.
In 2015 financial statements, of the total borrowings (EUR 1,109 million) EUR
898 million was covered by the issue of bonds and EUR 212 million by the issue
of commercial papers.
Liquidity remained on a good level throughout the year and liquidity on average
was equal to two months' expenses.
The Board of Directors of the Unemployment Insurance Fund approved on 24
November 2015 the debt serving plan for 2016.
Investing activities
The Unemployment Insurance Fund carries out investment activities in the extent
to manage the timing differences in the cash flows generated by its income and
expenses and also for liquidity management purposes. The investment portfolio of
TVR was during 2015 financed mainly by debt financing. The total amount of the
Unemployment Insurance Fund's investments and financial assets were EUR 604
(498) million at the end of 2015.
The performance of financial markets was quite stable in the first half of
2015, but uncertainty and fluctuation of the markets increased while reaching
the years ending. Stock prices continued increasing, value of the Euro weakened
and commodities prices decreased sharply. Long-term interest rates continued
decreasing, especially in low-risk loans. Central banks continued to support the
economy through the means of loose monetary policy, even though the US Federal
Reserve announced its intentions to gradually change the track of its policy.
The economy in the Euro-zone picked up slightly during the year, and the
unemployment rate decreased. On the other hand, concerns on the development of
emerging economies strengthened at the end of the year and, for example, the
Chinese stock markets faced significant decline in stock prices.
The Unemployment Insurance Fund's investment plan for 2015 took into account
the changed structure of the financial net position of the Fund in terms of the
invested assets having to be financed with debt financing during the year. The
aim was to retain the risk level of the investment portfolio low, and the
emphasis on the protective purpose of the investments continued in the
allocation of investments.
The investment plan was revised twice during the year, and the Fund invested
actively in money market instruments, bonds and, to a lesser degree, shares. At
the end of the year, EUR 207 (212) million of the Fund's assets were invested
in money market instruments, EUR 242 (206) million in bonds, EUR 0 (0,3)
million in shares and equity funds.
In 2015, the Fund achieved a return of 0.2 percent on invested capital. This was
significantly lower than the long-term average return, but the return was
consistent with the expectations and comparable with the benchmark return for
the investing activities.
The portfolio management of the Unemployment Insurance Fund was organized in the
usual manner, with the Fund managing liquid money market funds and the
management of long-term securities spread between external asset managers and
the Fund. At the end of the year, all the contracts with external asset managers
were cancelled and the assets were transferred under the Fund's management.
Risk management
The purpose of risk management is to identify and manage risks that could
endanger the solvency of the Unemployment Insurance Fund or the continuity of
its operations, or that could have an adverse effect on the Fund's operational
capabilities or the implementation of its strategy.
Another objective of risk management is to support the achievement of strategic
goals by monitoring the risks faced by the Fund, in order to ensure that they
remain in proportion to the Fund's objectives and risk-bearing capacity.
The Fund seeks to identify key risks in the risk management plan and limit them
to a level where their realization will not jeopardize the Fund's financial
position, continuity of operations or trust in its operations.
Risk management is part of the Unemployment Insurance Fund's supervision system.
The top management is responsible for organizing the Fund's risk management and
the whole internal control, but implementation is part of every employee's
responsibilities.
The risk management operations are driven and coordinated by the managing
director with assistance from the risk management working group, which started
its operations in 2015.
The Unemployment Insurance Fund is integrally linked to the Finnish national
economy. For this reason, smooth operation of the Fund's key objectives must be
safeguarded in all circumstances. The Fund's finances are mainly managed by
adjusting the unemployment insurance contribution amounts, determined on an
annual basis. Maintaining unemployment insurance contributions at an
appropriate, steady level is one of the Fund's core strategic goals.
The Fund employs a business cycle buffer to avoid fluctuations in the amounts of
the unemployment insurance contribution, and the size of this buffer has a
material impact on the Fund's risk-bearing capacity. The business cycle buffer
turned negative during 2015 and a significant amount of debt finance was used to
cover the unemployment insurance expenses. The Unemployment Insurance Fund's net
position at the end of 2015 was negative of EUR 686 million.
The Fund seeks to limit investment risks to a level where their realization will
not result in such significant losses for the Fund, which would create pressure
to increase the level of contributions or endanger the liquidity of the Fund.
The investment and financing activities and risk limits of the Unemployment
Insurance Fund are provided for in more detail in the investment principles
approved by the Supervisory Board and the investment plan and the debt-
management plan approved by the Board of Directors.
As a rule, the market risk of investments is measured by using stress test
method, in which a risk indicator expressed as annual volatility is assigned to
each investment class on the basis of historical fluctuations in value. In
2015, the risk indicator was 25% (25%) for equity investments, 4% (4%) for
bonds, and 1% (1%) for money market investments.
Main risks faced by the Unemployment Insurance Fund relate to the sufficiency
of the business cycle buffer and liquidity management, the ability to react to
changes in the operating environment, information systems' functioning, and the
availability and retention of human capital.
The Fund seeks to ensure the sufficiency of the business cycle buffer by
setting unemployment insurance contribution rates to a level sufficient to
provide security, using diverse forecasting methods. During periods of
downturn, the buffer may become negative, in which case liquidity must be
ensured, at least in part, by debt financing. The amount in the business cycle
buffer is evaluated both in absolute figures and in relation to the Fund's
expenses. At the end of 2015, the business cycle buffer's net position was
negative of EUR 686 million. The liquidity of the Unemployment Insurance Fund
was ensured by long-term bonds (EUR 898 million) as well as by commercial papers
issued (EUR 212 million) and therefore the overall indebtedness amounted to EUR
1,109 million.
The risk related to liquidity is intended to be secured by profitable and
protective investment activities as well as by comprehensive debt financing. As
a backup facility for the commercial paper program, the Fund has a credit
facility of EUR 300 million, and alongside with the issued bonds a credit
facility of EUR 700 million with a state guarantee by the Government.
The Fund seeks to manage the risk related to readiness for change through
competent anticipation of the known changes in the operating environment. This
requires an active communication with all stakeholders and, in particular,
decision-makers.
In recent years, the significance of information management and information
systems has increased considerably in the Fund's operations. Likewise, the
availability of key talents and retention of key personnel and human capital is
crucial to the Fund's operations. These risks are managed through consistency
plans, readiness and deputy arrangements as well as improving the Fund's
information systems' reliability and effectiveness.
1.1.4. Personnel
The Managing Director Heikki Pohja was retired on 28 February 2015. Janne
Metsämäki (LLM, Master of Laws) started as the Fund's new Managing Director as
from 1 January 2015.
The number of personnel was 101 (98) at the end of 2015, which was 89.1 (82.3)
persons in full-time equivalent.
37 (38) employees were men and 64 (60) were women. Personnel's average age was
38 (37) years and the average period of service was 4.3 (3.5) years.
The number of training days per person were on average 6 (4) days.
The Fund has implemented a compensation system that is based on complexity of
working tasks as well as a bonus system that is maintaining and developing
management skills.
Sick leaves were on average 9 (8) days per person year and 2.96 % (2.59 %)
calculated by EK's statistics.
1.1.5. Management
The Unemployment Insurance Fund has issued two publicly quoted bonds on Nasdaq
OMX Helsinki during 2015. Accordingly, the Fund's Board of Directors decided
that the Fund would comply with the applicable requirements of the Finnish
Corporate Governance Code issued by the Securities Market Association, which is
entered into force in 1 October 2010. Acting in compliance with Recommendation
54 of the Corporate Governance Code, the Fund has published a separate Corporate
Governance Statement on its website in fulfillment of the requirement referred
to in the Finnish Securities Markets Act (746/2012), chapter 7, section 7. The
Corporate Governance Code is publicly available on the website of the Fund.
Supervisory Board
On 27 November 2013, based on the proposal of the labor market parties, the
members of the Supervisory Board for the period from 1 January 2014 to 31
December 2016 were appointed by the Government. In 2015, the members of the
Supervisory Board were
Chairman Riku Aalto, Finnish Metalworkers' Union
(SAK)
Vice President Teija Asara-Laaksonen, The Trade Union for the
Public and Welfare Sectors JHL (SAK)
Board Member George Berner, Berner Oy
(EK)
Deputy Mayor Jorma Haapanen, City of Kotka, as from 16 January 2015
(KT)
Chairman of the Board Kimmo Hovi, as from 1 November 2015
(MTA)
CEO Tauno Kekäle, HAMK, as from 1 August 2015
(EK)
CEO Lauri Kivekäs, Rudus Oy (EK)
* Managing Director Ritva Laakso-Manninen, Haaga-Helia Oy, until 1 June
2015 (EK)
Director Salla Luomanmäki, Akava Special Branches
(AKAVA)
Chairman Jorma Malinen, Trade Union Pro
(STTK)
CEO Ilkka Mäkelä, Saarioinen Oy (EK)
* CEO Marjatta Nummela, Harviala Oy until 31 October 2015
(MTA)
Senior Vice President Harri Ojanperä, SOK as from 12 March 2015
(EK)
Chairman Ann Selin, Service Union United PAM
(SAK)
SVP, Human Resources Ari Svensk, Kesko Oyj
(EK)
Chief Justice of the Administrative Court Liisa Talvitie,Administrative
Court of Vaasa (KT)
Chairman Rauno Vesivalo, Union of Health and Social Care Professionals
Tehy, as from 30 January 2015 (STTK)
Deputy Mayor Ritva Viljanen, City of Helsinki
(KT)
Head of Social and Health Services Jaana Ylä-Mononen, City of Virrat
(KT)
Chairman Antti Zitting, Sacotec Components
(EK)
Ann Selin served as Chairman of the Supervisory Board with George Berner as Vice
Chairman. The Supervisory Board met three times in 2015.
Board of Directors
On 28 August 2014 and on 18 December 2014 e-mail meeting, the members of the
Board of Directors for 2015 were appointed by the Supervisory Board, based on
the proposal of the labor market parties.
On 17 March 2015 e-mail meeting, the Supervisory Board granted the resignation
request of Seppo Saukkonen as from 1 March 2015, and appointed Miia Kannisto in
his place as from 17 March 2015. On 22 April 2015 meeting, the Supervisory Board
granted the resignation request of KT's representative Markus Mankin as from 7
April 2015, and appointed Jorma Palola in his place as from 22 April 2015.
President Sture Fjäder AKAVA
Deputy Director General Pekka Hotti EK
Director Eeva-Liisa Inkeroinen EK
Labour Market Director Markku Jalonen KT
President Lauri Lyly SAK
Senior Legal Advisor Miia Kannisto, as from 17 March 2015
EK
*Legal Counsel (labor markets) Markus Mankin, until 7 April 2015
KT
Chairman of the Board Antti Palola STTK
Chief Negotiator Jorma Palola, as from 22 April 2015
KT
Labour Market Director Vuokko Piekkala
KiT
Senior Expert Vesa Rantahalvari EK
President Veli-Matti Rekola MTA
*Expert Seppo Saukkonen, until 1 March 2015
EK
Director Saana Siekkinen SAK
Vesa Rantahalvari was nominated as the Chairman of the Board of Directors with
Sture Fjäder as Vice Chairman. The Board of Directors met 14 times in 2015.
On 27 August 2013, the Board of Directors decided to begin updating the Funds
current strategy, and the work was ended in March 2015.
Auditors and the internal audit
Authorized Public Accountants PricewaterhouseCoopers Oy served as the Funds
auditor, with Authorized Public Accountant Juha Wahlroos in charge of the audit.
The internal audit of the Fund was carried out by Authorized Public Accountants
BDO, with Chartered Public Finance Auditor Helge Vuoti in charge of the audit.
Office
The office of the Unemployment Insurance Fund is located at Kansakoulukuja 1,
Helsinki.
Representations
Janne Metsämäki was a member of Advisory Board for employment allowance issues
of Social Insurance Institution of Finland and Tapio Oksanen a deputy member.
Memberships
The Unemployment Insurance Fund is the member of International Common
Organisation of Unemployment, International Social Security Association (ISSA),
and corresponding organization of EU member states, European Social Insurance
Platform (ESIP), and Nordic Nordiskt Socialförsäkringsmöte (NSF). The Fund is an
observer member in the European Association of Social Protection Institutions
managed by labor market confederations (AEIP).
1.1.6. Events after the reporting date
The unstable state of economy has continued in the beginning of 2016. The amount
of unemployed jobseekers is estimated to continue to increase during 2016
compared to the previous year, although the growth in unemployment rate could
slow down. The Unemployment Insurance Fund estimates that the amount of paid
unemployment benefits will increase during 2016 compared to the previous year.
The Unemployment Insurance Fund's liquidity has been relatively good, due to the
front-loaded nature of insurance contributions, as well as the increases made to
the unemployment insurance payments in the beginning of the year. The Fund has
continued the implementation of the debt-management plan approved in November
2015. The need for debt financing will become clearer during the spring.
The determination and collection of unemployment insurance contributions has
gone as planned. The level of service in the insurance contribution's customer
service has been excellent despite the peak season at the end of the year. The
use of electronic services has increased significantly. The level of service in
the collection has been good.
2. Financial Statements (IFRS)
2.1. Statement of changes in net position
€ Note 1.1.-31.12.2015 1.1.-31.12.2014
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Contributions collected
Unemployment insurance contributions 5 3 330 197 485 3 030 983 611
--------------------------------------------------------------------------
Total contributions collected 3 330 197 485 3 030 983 611
--------------------------------------------------------------------------
Benefits paid
Benefit payments 6 -3 992 308 742 -3 696 652 542
Administrative expenses 7 -9 737 672 -9 315 401
--------------------------------------------------------------------------
Total benefits paid -4 002 046 414 -3 705 967 943
--------------------------------------------------------------------------
Net fair value gains on investments 13 970 356 3 933 522
Finance costs 8 -5 782 531 -796 720
--------------------------------------------------------------------------
TOTAL CHANGES IN NET POSITION -676 661 104 -671 847 529
--------------------------------------------------------------------------
2.2. Statement of net position
€ Note 31.12.2015 31.12.2014
-------------------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and equipment 9 528 916 775 272
Intangible assets 10 1 567 325 259 143
Other receivables 12 328 038 328 038
-------------------------------------------------------------------------------
Total non-current assets 2 424 279 1 362 453
-------------------------------------------------------------------------------
Current assets
Unemployment insurance contribution
receivables 11 5 538 004 6 186 960
Other receivables 12 139 141 653 65 913 426
Investments 14 370 511 273 384 867 010
Cash and cash equivalents 15 86 390 563 39 438 501
-------------------------------------------------------------------------------
Total current assets 601 581 493 496 405 898
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total assets 604 005 772 497 768 351
-------------------------------------------------------------------------------
For previous periods -9 196 153 662 651 376
For the period -676 661 104 -671 847 529
-------------------------------------------------------------------------------
NET POSITION -685 857 257 -9 196 153
-------------------------------------------------------------------------------
LIABILITIES
Non-current liabilities
Borrowings 16 897 635 070 0
-------------------------------------------------------------------------------
Total non-current liabilities 897 635 070 0
-------------------------------------------------------------------------------
Current liabilities
Borrowings 16 215 366 391 267 935 925
Unemployment insurance contribution payables 11 43 241 208 42 340 019
Other liabilities 17 133 620 359 196 688 561
-------------------------------------------------------------------------------
Total current liabilities 392 227 959 506 964 504
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total liabilities 1 289 863 029 506 964 504
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total net position and liabilities 604 005 772 497 768 351
-------------------------------------------------------------------------------
2.3. Statement of cash flows
€ 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Unemployment insurance contributions
collected 3 375 110 951 3 063 948 273
Benefits paid -3 918 679 279 -3 629 250 315
Interest paid -8 815 490 -2 635
-------------------------------------------------------------------------------
Net cash used in ordinary activities -552 383 818 -565 304 677
-------------------------------------------------------------------------------
Cash flows from investing activities
Purchases of property, plant and equipment -100 697 -372 886
Proceeds from sale of property, plant and
equipment 200 2 950 000
Purchases of intangible assets -47 728 -104 986
Investments in financial assets -2 614 283 673 -10 520 924 043
Proceeds from sale of financial assets 2 362 413 593 10 842 089 036
Other non-current receivables 328 038 328 038
-------------------------------------------------------------------------------
Net cash generated from investing activities -251 690 267 323 965 159
-------------------------------------------------------------------------------
Proceeds from borrowings 851 026 147 255 897 751
-------------------------------------------------------------------------------
Net cash generated from financing activities 851 026 147 255 897 751
-------------------------------------------------------------------------------
Net increase(+)/decrease(-) in cash and cash
equivalents 46 952 062 14 558 233
Cash and cash equivalents at beginning of
year 39 438 501 24 880 268
-------------------------------------------------------------------------------
Cash and cash equivalents at end of year 86 390 563 39 438 501
-------------------------------------------------------------------------------
2.4. Notes to the financial statements
Accounting policies of the financial statements
1. General information
The Unemployment Insurance Fund ("UIF", "the Fund") (business ID 1098099-7),
established in 1999, is an independent institution managed by labour market
parties and supervised by the Ministry of Social Affairs and Health and Finnish
Financial Supervisory Authority, whose main objective is to finance unemployment
benefits. The Fund also directs, develops and supervises the implementation of
the collection procedure of unemployment insurance contributions and determines
and collects the employers liability component of unemployment allowances. In
addition, the Fund manages employer's professional educational allowances. The
professional education allowance is based on the Act on Compensating
Professional Education (1140/2013). The Unemployment Insurance Fund is domiciled
in Helsinki, and its address is Kansakoulukuja 1, 00100 Helsinki.
The Funds operations are financed with the unemployment insurance contributions
collected from employers and employees, and investment income. The collection of
unemployment insurance contributions was a duty of accident insurance
institutions until the end of 2012. The Unemployment Insurance Fund started to
manage the collection of unemployment insurance contributions in the beginning
of 2013.
The Unemployment Insurance Fund makes monthly prepayments for the financing
shares to the unemployment funds on the basis of applications received by the
Fund. The Fund also processes and pays the prepayments for the government
contributions. The Funds operations are based on the Act on Financing of the
Unemployment Benefits (555/1998), the Decree of the Financing of the
Unemployment Benefits (1176/98) and on the Decree on Rules of Procedure of the
Unemployment Insurance Fund (862/1998) with amendments.
The principal accounting policies applied in the financial statements of the
Fund are set out below. These policies have been consistently applied to all
years presented, unless otherwise stated.
2. Summary of significant accounting policies
2.1. Basis of preparation
The financial statements of the Unemployment Insurance Fund have been prepared
in accordance with International Financial Reporting Standards (IFRS) as adopted
by the European Union, conforming with the IAS standards and IFRS standards as
well as SIC and IFRIC interpretations applicable as per 31 December 2015. IFRS
refer to the standards and interpretations applicable by corporations set out by
the Finnish accounting ordinance and other guidance set out on the basis of this
ordinance enforced for application in accordance with the procedure stipulated
in the regulation (EC) No 1606/2002 of the European Parliament and of the
Council. The notes to the financial statements also comply with the Finnish
accounting and corporate legislation complementing the IFRS standards.
The Unemployment Insurance Fund is a non-profit, government-affiliated fund
whose operations are based on the Act on Financing of the Unemployment Benefits,
the Decree of the Financing of the Unemployment Benefits and on the Decree on
Rules of Procedure of the Unemployment Insurance Fund with amendments, as stated
in section 1.
UIF collects and pays unemployment insurance contributions. UIF does not carry
out such business activities where it would generate revenues arising from the
sale of goods or rendering of services. Due to the nature of UIF's operations,
the Fund does not generate revenues and common revenue recognition principles do
not apply. IFRS standards do not directly regulate the structure of IFRS
financial statements of a fund like UIF, or the basis for recognition and
measurement of transactions. In preparation of UIF`s IFRS financial statements,
the framework of IFRS standards and general principles for recognition and
measurement have been applied. Due to these factors, the primary statements of
UIF's IFRS financial statements are the statement of changes in net position,
the statement of net position and the statement of cash flows.
The changes in net position for the financial period consist of the sum of
unemployment insurance contributions collected and paid, gains on investments
and financial items. The difference between the assets and the liabilities of
the Fund reflects the accumulated net position, which is also referred to as
business cycle buffer. A more detailed description of the business cycle buffer
is provided in note 4.2. UIF has no shares or equity. Therefore, these IFRS
financial statements do not include the statement of changes in equity, however
the statement of changes in net position is presented as a separate primary
statement.
During the financial periods presented the Fund has not had any such
transactions that should have been recognized in other comprehensive income.
Therefore, these IFRS financial statements do not include the statement of other
comprehensive income.
UIF does not operate as an insurer as it does not issue or hold insurance or
reinsurance contracts. Therefore, the Fund's operations are not in the scope of
IFRS 4 Insurance Contracts.
The financial statements have been prepared primarily under the historical cost
convention as modified by fair valuation of financial assets classified at fair
value through profit or loss. The financial statements are presented in euros
unless otherwise stated.
The preparation of financial statements in conformity with IFRS requires the use
of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the accounting policies of the
financial statements. Significant accounting estimates and judgements have been
described in note 3.
2.1.1. New standards and interpretations not yet adopted
The following standards and interpretations will be adopted by UIF in 2016, but
whose application is not yet compulsory in the financial statements.
* Amendment IAS 1: Presentation of Financial Statements (Disclosure
Initiative). The purpose of the amendment is to encourage entities to assess
the notes presented and the way they are grouped. The amendment is not
expected to have a significant effect on the financial statements of UIF.
* Improvements to IFRS (Annual Improvements to IFRSs 2012-2014). The amendment
is not expected to have a significant effect on the financial statements of
UIF.
The Unemployment Insurance Fund has not yet applied the following new and
amended standards and interpretations already issued but not endorsed by the
European Union. The Fund will adopt them as of the effective date or, if the
date is other than the first day of the financial year, from the beginning of
the subsequent financial year.
IFRS 9 will replace IAS 39 as a whole. Parts of the IAS 39 standard are
transferred unchanged to the new standard. Primary changes are as follows: IFRS
9 requires financial assets to be classified into three measurement categories:
those measured as amortized cost, those measured as at fair value through other
comprehensive income and those measured as at fair value through profit and
loss.
The category is determined at initial recognition and it depends on the entity's
business model for managing its financial instruments and the contractual cash
flow characteristics of the instrument. For financial liabilities, the standard
retains most of the IAS 39 requirements. For impairment charges, a new model
based on expected losses has been introduced which replaces the model of IAS 39
based on incurred losses. Hedge accounting has been changed so that it will
better reflect risk management strategies and objectives. The standard is
effective for accounting periods beginning on or after 1 January 2018.
According to IFRS 16, lessees are required to recognize a lease liability
reflecting future lease payments and a 'right-of-use' asset for virtually all
leas contracts. The standard is effective in financial years starting on January
1, 2019 or later.
The Fund is currently analyzing the effects of the new standards. There are no
other IFRS standards or IFRIC interpretations that are not yet effective and
that would be expected to have material impact on the Unemployment Insurance
Fund.
2.2. Foreign currency translation
The financial statements are prepared in euros which is UIF`s functional and
presentation currency. The Funds foreign currency transactions are translated
into functional currency using the exchange rates prevailing at the dates of the
transactions. Deposits denominated in foreign currencies are measured at fair
value through profit and loss, and the effects of changes in exchange rates have
been presented as part of the total fair value change.
2.3. Unemployment insurance contributions
The Unemployment Insurance Fund determines and collects the unemployment
insurance contributions based on the Chapter 7 of the Act on Financing of the
Unemployment Benefits. Determination and collection of unemployment insurance
contributions was transferred from accident insurance institutions to the
Unemployment Insurance Fund at the beginning of insurance year 2013. Accident
insurance institutions are responsible for the determination and collection of
insurance contributions for 2012 and earlier. Accident insurance institutions
pay unemployment insurance contributions to the Fund at fixed dates.
Unemployment insurance contribution prepayments are determined in the year
preceding the insurance year, and recognized as income in the insurance year.
Payments determined during the insurance year, like contributions from new
employers liable for payment are recognized directly as income when determining
the unemployment insurance contribution. Unemployment insurance prepayments
concerning the year following the insurance year paid by employers are
recognized as prepayments and accrued income and accruals and deferred income.
In so far as fees have not been paid in advance unemployment insurance advances
are offset.
Unemployment insurance contribution income relating to 2012 and before,
collected by accident insurance institutions and paid to the Unemployment
Insurance Fund, are recognized as expense for the current financial period on
the basis of the insurance companies' reports.
2.3.1. Employers liability components of unemployment
allowance
The Unemployment Insurance Fund determines and collects liability component
compensations of unemployment allowances from employers. The liability component
of unemployment allowance applies to the employers whose payroll amount, serving
as the basis for the calculation of the unemployment insurance contribution,
exceeds the minimum level of EUR 2 025 000 (in 2015). The employer may be
required to pay employers liability component of unemployment allowances if it
has terminated or laid off an aged employee who have had an employment contract
for indefinite period and more than three years of employment and the employee
has been long-term unemployed or laid off. Unemployment benefit expenses are
financed by the liability component compensations.
Collected liability component contributions that cover the costs of unemployment
allowances are recognized as income for the period when the income amount can be
reliably measured. In order to cover the additional daily unemployment benefits
the collected liability component compensations are recognized as income within
several financial periods based on the estimate of the realization of
corresponding expenses.
2.3.2. Compensations in accordance with the Employment
Contracts Act 12:3
According to the Employment Contracts Act, the courts have to hear the
Unemployment Insurance Fund in disputes that relate to the termination of
employment and when the claimant has received earnings-related unemployment
allowance after the termination of employment. As a rule, 75 % of the earnings-
related daily unemployment allowance received by the employee during the
indemnity period is deducted from the indemnity imposed to the employer for an
unfounded termination of employment. The court shall assign the employer to make
the deduction payment to the Fund. If the employer and the employee agree on the
indemnity, this agreement should take into account the share received by the
Fund.
2.3.3. Receivables subject to debt-collection
The Fund collects and enforces neglected unemployment insurance contributions,
those subject to enforcement, and contributions due by companies in bankruptcy
or debt restructuring proceedings. The collection and enforcement of
contributions due in 2012 and before is managed by the insurance companies as
authorized by the agreement between the Fund and the Federation of Accident
Insurance Institutions. The insurance companies settle the accumulated insurance
contributions in their quarterly reports.
2.4. Benefits paid
2.4.1. Subsidies to the unemployment funds
Based on the Act on the Financing of Unemployment Benefits (555/1998) and with
regard to the financing of earnings-related unemployment allowances, the
Unemployment Insurance Fund is responsible for expenses from basic unemployment
allowances, employment promotion measures and from job alternation compensations
insofar as the state or individual unemployment funds are not liable for these.
The above-mentioned benefits are paid from the unemployment funds. Adult
education allowance is paid from the Education Fund. In addition, the
Unemployment Insurance Fund is responsible for the unemployment insurance
contributions for unemployed persons and recipients of the adult education
allowance that are paid through the Finnish Centre for Pensions to the
employment pension institutions.
According to the Decree on the Implementation of the Act on Unemployment Funds
(272/2001), the processing of prepayment applications and payment decisions
together with monitoring the sufficiency of the prepayments are at the
responsibility of the Unemployment Insurance Fund. The Fund makes prepayments to
the unemployment funds twice a month in accordance with the budget approved in
the end of previous financial period. The Fund receives monthly statistics from
the Financial Supervisory Authority on the accumulated allowances paid by the
funds to their customers, and based on that the Fund has accrued the prepayments
and actual payments to each fund either as receivable or liability in its
accounts. This accrual is recognized by benefit type.
The funds for the government contribution paid to unemployment funds are
received from the Ministry of Social Affairs and Health. The Fund transfers the
prepayments of government contributions to the unemployment funds on the first
banking day of each month. In 2015, the Ministry of Social Affairs and Health
paid the government contributions to the Fund as fixed monthly payments, unless
otherwise proposed by the Unemployment Insurance Fund.
The income received from the ministries and the expenditures paid to the
unemployment funds have been recognized to the extent to how much of each
benefit the unemployment funds have paid to their customers. The Ministry of
Social Affairs and Health will confirm the financial statements of the
unemployment funds on the basis of final information in summer 2016 when the
Fund will make the equalizations in account balances between the unemployment
funds and the state.
The Unemployment Insurance Fund has the sole responsibility for financing of the
supplementary allowance and change security supplement of the basic unemployment
allowance. These benefits are paid both by the unemployment funds and Kela. No
funds were used in 2015 for financing of the additional part of the Unemployment
allowance and the change security supplement.
Based on the Section 19a of the Act on Unemployment Funds (556/1998), the Fund
pays a membership fee equalization payment to those employee's funds that have
paid significantly more unemployment benefit days in the previous year than the
average per member for all unemployment funds, in order to even out the
unemployment burden prevailing in different industries, within the limits of an
appropriation decided by the Supervisory Board each year. The balance of the
unemployment fund's equalization fund may also be taken into account in
determining the membership fee equalization payment. The Board of Directors of
the Fund has also paid attention to the level of membership fees in relation to
other unemployment funds and to changes in membership fees in the two preceding
years.
2.4.2. Payments to the Finnish Centre for Pensions and State
Pension Fund and their accrued interest
The Unemployment Insurance Fund's second largest expense has been the
contribution paid to the Finnish Centre for Pensions that is to cover the
liabilities and expenses arising from taking into account the time of
unemployment, education and job alternation leave (Employees Pension Act
(395/2006), Sections 74 and 182). The amount of this contribution is determined
by estimating the average amount of pension contributions that would be paid for
the unpaid periods that constitute the basis of the accrued pension security.
As stated above, the Unemployment Insurance Fund is responsible for the
contribution provided for in Sections 62 and 133 of the State Employee's Pension
Act (1295/2006) to the State Pension Fund.
Payments made to the Finnish Centre for Pensions for the financial year in
accordance with the Section 12c of the Employees Pensions Act (561/1998) are
based on an estimate provided by the Finnish Centre for Pensions, specified in
connection with the financial statements. The difference between the payments
made and the adjusted estimate is recognized as prepayments and accrued income
or accruals and deferred income. The final payment amount is received from the
Finnish Centre for Pensions in the spring of the year following the financial
year, and the difference between the final payment and the payment estimate used
in the financial statements is presented as an adjustment, an equalization
payment for the previous year, in the following year's financial statements. The
revised payment for the year and the equalization payment for the previous year
have been specified in the notes to the financial statements.
The Finnish Centre for Pensions assigns interest on the charges ordered for the
Unemployment Insurance Fund according to the TyEL interest rate. The revised
payment included in the financial statements accrues interest until the end of
the financial year (debiting interest). The Finnish Centre for Pensions refunds
the interest to the Unemployment Insurance Fund according to the actual payments
and payment dates (compensatory interest). The final payment amount determined
in the following year accrues interest until the clearance date agreed between
the Finnish Centre for Pensions and the Fund (previous year's debiting
interest). Compensatory interest is correspondingly calculated for all payments
made by the Fund in the previous year (compensatory interest for the previous
year's payments). The debiting and compensatory interests for payments to the
State Pension Fund are calculated in a manner identical to the above.
2.4.3. Settlement to Kela of income from the unemployment
insurance contributions of employees who are not members of an unemployment fund
Based on Sections 8 and 23 of the Act on the Financing of Unemployment Benefits
(555/1998), the Fund pays to Kela an annual amount from employee's unemployment
insurance contribution income, corresponding to the percentage of employees who
are not members of an unemployment fund. The amount of the settlement is
estimated from data collected by Statistic Finland, and the estimate is
confirmed by the Ministry of Social Affairs and Health.
2.4.4. Financing of the Education Funds benefits and
operations
Based on Section 13 of the Act on Education Fund (1306/2002) and Section 30 of
the Act on Adult Education Allowance (1276/2000), the Unemployment Insurance
Fund is responsible for the financing of the earnings-related part of the adult
education allowance and the scholarships, together with the related
administrative expenses. The Unemployment Insurance Fund makes monthly payments
to the Education Fund according to the preliminary calculation prepared by the
Education Fund. The benefits are paid from the Education Fund. The funds have
separate administrations and the ordinary activities of the Education Fund are
defined by legislation.
2.4.5. Financing of security pay
Based on Section 31 of the Pay Security Act (866/98), the Unemployment Insurance
Fund is responsible for the state's pay security expenses. Pay security expenses
are paid to the Ministry of Employment and the Economy based on the invoice sent
by the Ministry once a year, normally in March of the following year.
2.4.6. Member State invoicing for unemployment allowances
Article 65 of Regulation (EC) No 883/2004 of the European Parliament and of the
Council on the coordination of social security systems (basic regulation)
provides for situations in which a person becomes unemployed after working in a
Member State other than his or her country of residence. In Finland the
Unemployment Insurance Fund has been designated as the competent body when
implementing this basic regulation with regard to earnings-related unemployment
insurance. The Fund's responsibilities include the payment and collection of the
compensations provided for in paragraphs 6 and 7 of Article 65.
The Unemployment Insurance Fund applies for compensations from member states
depending on how unemployment funds have paid unemployment compensations to
those who have been working in other member state. In turn, member states apply
for compensation from the Unemployment Insurance Fund. The benefits will be
fully repaid, but not more than the amount that would have been paid in the
country of employment. Income and expenses are recognized on a cash basis.
2.4.7. Training compensation
UIF handles the employer training compensations. The training compensation is
based on the Act on Training Compensation (1140/2013). The training compensation
is a monetary support to develop competence for those employers who are not
eligible for a training deduction granted by the Business Income Tax Act or
Agricultural Income Tax Act. Such employers are for example municipalities,
churches and organizations. The purpose of training compensation is to improve
the employer's opportunities to organize training for its employees, to develop
their vocational competence. Training compensations can be received in maximum
of three training days per employee annually.
The right to receive training compensation started in the beginning of 2014 and
the deduction was granted in the employer's application for the first time
during 2015, when the Unemployment Insurance Fund confirmed the final amount for
the unemployment insurance.
The financing of training compensation has been designated, so that the Ministry
of Finance pays based on application from Unemployment Insurance Fund each
calendar year the amount, which the Fund has refunded to the employers for the
training compensation.
2.5. Property, plant and equipment
Property, plant and equipment include the Fund's machinery and equipment and the
leasehold improvements. Property, plant and equipment are measured at historical
cost less accumulated depreciation and impairment charges in the statement of
net position. Leasehold improvements are added to the premises improvements
carrying amount when it is probable that future economic benefits associated
with the item will flow to the Fund. Ordinary repair and maintenance costs are
expensed in the period in which they are incurred.
Depreciation on property, plant and equipment is calculated using the straight-
line method over their estimated useful lives. As a rule, the residual value is
estimated to be zero. Assets' residual values and useful lives are reviewed when
financial statements are prepared. Depreciation periods are adjusted if the
estimate changes significantly. Estimated useful lives by asset class are as
follows:
Leasehold improvements 5 years
Machinery and equipment 3 years
Gains and losses on disposal and decommissioning of property, plant and
equipment are calculated as the difference between net proceeds and the carrying
amount. Gains and losses on disposals are included in the administrative
expenses in the statement of changes in net position.
2.6. Intangible assets
Intangible assets with finite useful life include acquired or internally
generated computer software, and other intangible assets when it is probable
that future economic benefits associated with the asset will flow to the Fund
and the cost can be measured reliably. The cost of an internally generated
intangible asset is defined as the sum of directly attributable production costs
allocated to the asset.
Costs associated with maintaining computer software are expensed as incurred.
Research costs are recognized as an expense in the financial period in which
they are incurred. Development costs that are attributable to the design and
testing of computer software, or to significant changes to existing software,
are capitalized only when they meet the above-mentioned criteria of recognition
to the statement of net position.
Intangible assets with finite useful life are measured at historical cost less
amortization and impairment charges. Amortization of intangible assets is
calculated using the straight-line method over their useful lives. The estimated
useful lives are as follows:
Computer software 3 years
Software development costs 3 years
2.7. Impairment of non-financial assets
At the end of each financial period it is assessed whether there have been any
events or changes in circumstances that indicate that the value of an intangible
asset or an item of property, plant and equipment subject to amortization or
depreciation may have been changed. If there are any indicators of impairment,
the recoverable amount is determined.
The recoverable amount is the higher of an asset's fair value less costs of
disposal and value in use. Value in use refers to the asset's expected future
net cash flows that have been discounted to net present value by using the
determined discount rate. An impairment loss is recognized in the statement of
changes in net position for the amount by which the asset's carrying amount
exceeds its recoverable amount. The useful life of a depreciated asset is
reviewed in connection with recognition of impairment losses.
Impairments are reversed if circumstances have been changed and assets
recoverable amount has been changed after the recognition of the impairment,
however, not more than the carrying amount would be without recognizing the
impairment charge.
2.8. Financial assets and liabilities
Financial assets
The Unemployment Insurance Funds financial assets consist of investments and
cash and cash equivalents.
At the date of acquisition, the management of the Unemployment Insurance Fund
classifies the financial assets into classes that determine the basis of
valuation. All financial assets are recognized at trade date that is the day
when the Fund commits to buy or sell the asset.
Investments are financial assets designated as financial assets at fair value
through profit and loss at inception because the Fund manages the assets and the
performance is evaluated based on fair value (application of "the fair value
option"). Investments are presented in the statement of net position as current
assets unless the investment matures and management intends to dispose it after
12 months from the reporting date.
Investments are initially recognized at fair value. Transaction costs are
recognized directly as expenses. After initial recognition the investments are
measured at fair value at each reporting day, and realized and unrealized
changes in fair value are recognized in the statement of changes in net position
in the period in which they arise. Net changes in fair value are presented in
the statement of changes in net position on the line "Net fair value gains on
investments ". All interest and dividend income is included in the net fair
value change. The valuation techniques used in determining fair values is
presented in note 13.
Financial assets are derecognized when the rights to receive cash flows have
been expired or have been transferred to other party so that all the risks and
rewards have been transferred.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with
banks.
Borrowings
Borrowings are recognized initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortized cost. Any difference
between the proceeds (net of transaction costs) and the redemption value is
recognized in the statement of changes in net position over the period of the
loan using the effective interest method.
Fees paid on the loan facilities are recognized as transaction costs of the loan
to the extent that it is probable that some or all facility will be drawn down.
In this case, the fee is deferred and recognized in the statement of net
position until the loan is drawn down. To the extent there is no evidence that
it is probable that some or all of loans of the facility will be drawn down, the
fee is capitalized as a prepayment for liquidity services and amortized over the
period of the facility.
2.9. Leases
The Fund as lessee
Finance leases
Leases in which the significant portion of the risks and rewards of ownership
are transferred to the Fund are classified as finance leases. The Unemployment
Insurance Fund does not have any finance leases.
Other leases
Leases in which the significant portion of the risks and rewards of ownership
are retained by the lessor, are classified as operating leases and they are
included in the balance sheet of the lessor. Payments made under operating
leases are charged to the statement of changes in net position on a straight-
line basis over the lease term.
The Fund as lessor
Other leases
The Fund has subleased part of its leased premises. The sub-lease agreement is
classified as an operating lease. Rental income from operating leases is
recognized in the statement of changes in net position on a straight-line basis
over the lease term.
3. Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires
management to make estimates and assumptions that have affected the income,
expenses, assets and liabilities presented in the financial statements.
Judgement is needed also in the application of accounting policies. The
estimates are based on the best information available at the reporting date. The
evaluation is based on both earlier experience and assumptions for future that
are most probable at the reporting date.
Actual results can differ from these decisions made based on these estimates and
assumptions. Possible changes in estimates are recognized in the period in which
the estimate is adjusted and all subsequent periods.
The planning and managing of the Unemployment Insurance Fund's finances is
largely based on forecasts on development of the unemployment rate, unemployment
expenses, employment rate and wages. Under normal conditions, the Fund must set
the insurance contributions at the sufficient level where all projected expenses
could be covered with the insurance contributions. The unemployment insurance
contributions are set for one year at a time. When the contribution levels are
adjusted, the employers' and employees' contributions are adjusted by the same
percentage. The forecast deviation in the change in net position between the
budget prepared in August in the preceding year and the financial statements
that are prepared more than a year later, has been per year on average 5 % of
expenses over the last five years. In 2015, the forecast deviation was below the
average amount.
The Fund uses judgement in applying the valuation methods used in the
measurement of fair value in so far as the fair values are not received as
direct prices from active markets. Fair value determination of current money
market investments is based on the discounted cash flows, and management has
used judgement when it has concluded that the change of credit risk does not
have material impact on the change of fair values of investments due to their
short duration and high credit rating.
The Funds critical assumptions concerning the future and key uncertainties in
the reporting date are related to above mentioned factors.
Segment reporting
IFRS 8 Operating Segments standard requires that an entity shall disclose
information to enable users of its financial statements to evaluate the nature
and financial effects of the business activities in which it engages and the
economic environments in which it operates. As defined in the standard an
operating segment is a component of an entity:
a) that engages activities from which it may earn revenues and incur expenses
b) whose operating results are regularly reviewed by the entity's chief
operating decision maker to make decisions about resources to be allocated to
the segment and assess its performance, and
c) for which discrete financial information is available.
Further, according to the definition of the standard, the function of chief
operating decision maker is to allocate resources to and assess the performance
of the operating segments of an entity.
The objective of UIF is to collect unemployment insurance contributions, the
level of which has been determined by public authorities. UIF pays collected
contributions onwards, mainly to unemployment funds. With the collected
contributions UIF engages in conservative investment activities in order to
cover the benefit payments. UIF covers possible deficit also with loan
financing.
The Unemployment Insurance Fund is a non-profit, government-affiliated fund.
Management of UIF monitors the Fund's activities as a single entity which
consists of the contributions collected and benefits paid resulting in a change
in net position. In the end, the management of UIF does not actually allocate
resources to the entitys activities or review the effectiveness of operations.
For these reasons, UIF's management assesses that the presentation of segment
information is not appropriate. Presenting segment information would not improve
the ability of a reader of the financial statements to assess UIFs operations,
nature of the operating environment and financial effects.
According to UIF`s management, UIFs nature of operations and operating
environment as well as financial effects are fairly presented in the IFRS
financial statements.
4. Financial risk management
The financial risks of the Unemployment Insurance Fund relate mainly to the
investments and they comprise market risk, credit and counterparty risk and
liquidity risk.
To minimize the financial risks, investments are diversified and made to
different types of financial assets in accordance with the investment principles
confirmed by the Supervisory Board. Risk limits are set to such a level that
their realization would not result in significant losses for the Fund such that
they would create pressure to increase the level of contributions or endanger
the liquidity of the Fund. The Fund may enter into derivative contracts for
hedging purposes, however derivatives were not used during the periods
presented.
The Fund measures all its investments at fair value because they have been
designated as financial assets at fair value through profit and loss.
Specification of the investments and their fair values by class of investment
are presented in note 13.
4.1. Financial risk factors
4.1.1. Market risk
The Board of Directors monitors the market risk of the investment portfolio of
the Unemployment Insurance Fund on a monthly basis, and it is managed in
accordance with the investment principles and investment plan through allocation
decisions. When making the allocation decisions, the current market situation
and outlook are taken into account. Furthermore, the investment decisions
consider the size of the Fund's net position and the minimum limit for the
amount of investments with less than 12 months maturity.
The investment plan contains target allocations for different types of
investments and risk limits for different counterparties.
Market risk is measured by using stress test method, in which a risk indicator
expressed as annual volatility is assigned to each investment class on the basis
of historical fluctuations in value.
Market risk on 31.12.2015 and 31.12.2014 was as follows:
+------------+------------------------------------+
| | 31.12.2015 |
| +-------+---------------+------------+
| |Risk, %|Capital, in EUR|Risk, in EUR|
+------------+-------+---------------+------------+
|Money market| 1,0 | 207 042 334 | 2 070 423 |
+------------+-------+---------------+------------+
|Bonds | 4,0 | 242 494 188 | 9 699 768 |
+------------+-------+---------------+------------+
|Shares | 25 | 8 473| 2 093 |
+------------+-------+---------------+------------+
|Total risk | 2,62 | 449 544 895 | 11 772 284 |
+------------+-------+---------------+------------+
+------------+------------------------------------+
| | 31.12.2014 |
| +-------+---------------+------------+
| |Risk, %|Capital, in EUR|Risk, in EUR|
+------------+-------+---------------+------------+
|Money market| 1,0 | 212 282 308| 2 122 823|
+------------+-------+---------------+------------+
|Bonds | 4,0 | 206 328 390| 8 253 136|
+------------+-------+---------------+------------+
|Shares | 25 | 276 121| 69 030|
+------------+-------+---------------+------------+
|Total risk | 2,49 | 418 886 819| 10 444 989|
+------------+-------+---------------+------------+
The total risk was 2,6 % of the Fund's assets and 0 % of the Fund's income in
2015. The risk of the investment portfolio was moderate, due to the investment
portfolio's conservative structure, and that the low risk level of the
securities in the portfolio.
The main market risk factor for the Fund is interest rate risk. The investment
portfolio is dominated by fixed income investments (money market investments and
bonds). The Fund may make investments directly, or indirectly through investment
funds. At the reporting date, 3,2 % (2014: 3,0 %) of investments were indirect.
In addition to the investments, also the borrowings of the Fund with variable
interest rates, expose it to interest rate risk. Borrowings with variable
interest rates amounted to EUR 212 million (256) at the reporting date.
All money market investments carry variable interest (2014: 100 %), while 28 %
(2014: 2 %) of the bonds were at variable rates. Variable rate investments
expose the Fund to cash flow interest rate risk, while investments at fixed
rates expose the Fund to fair value interest rate risk.
If at the reporting date the euribor rates and interest rate curve (swap rates)
had been 50 basis points higher with all other variables held constant, the
total changes in net position would have been EUR 1 659 221 (2014: EUR
2 696 053) lower. Respectively, if at the reporting date the euribor rates and
interest rate curve (swap rates) had been 50 basis points lower, the total
changes in net position had been EUR 1 660 049 (2014: EUR 2 679 098) higher.
This is due to fair value changes of the fixed income investments and the
changes in the interest costs of the variable rate borrowings. Due to the low
risk investment principles of the Fund, the amount of share investments has been
very low during recent years and accordingly, share price risk is considered
immaterial.
4.1.2. Credit risk
Credit risk of the investments is managed by issuer credit limits. Limits for
each issuer are determined by taking into account the absolute size, economic
position and future outlook of the issuer. The Fund continuously monitors the
credit standing and future outlook of the issuers, and when changes occur, the
limits are either increased or decreased. The Fund mainly invests in Nordic
banks which have high credit ratings, best rated states (Finland, Germany,
Holland and Sweden), domestic companies and municipalities. Cash and cash
equivalents are only held in banks with high credit ratings.
The Fund may make investments in those funds whose corporate investments'
average credit rating is A (S&P) or Aa3 (Moodys). In addition, each individual
investment of the investment fund has to be in the investment grade with credit
rating at least BBB+ (S&P). The following table summarizes the amount of
interest rate investments and credit quality, divided to investment classes. The
numbers are in thousands of euros:
-------------------------------------------------------------------------------
Divided by credit ratings
of investment issuers'
(tEUR) * 31.12.2015 31.12.2015 (%) 31.12.2014 31.12.2014 (%)
-------------------------------------------------------------------------------
AAA 12 498 2,8 % 52 308 13,7 %
AA+ 116 531 25,8 % 119 037 31,3 %
AA 3 498 0,8 % 1 002 0,3 %
AA- 147 848 32,8 % 85 211 22,4 %
A+ 36 829 8,2 % 4 977 1,3 %
A 28 367 6,3 % 8 000 2,1 %
A- 12 691 2,8 % 13 010 3,4 %
BBB+ 29 604 6,6 % 20 969 5,5 %
BBB 25 408 5,6 % 21 504 5,7 %
BBB- 16 813 3,7 % 21 705 5,7 %
BB+ 3 188 0,7 % 3 651 1,0 %
BB 5 891 1,3 % 7 784 2,0 %
BB- 10 848 2,4 % 12 377 3,3 %
NR 1 206 0,3 % 8 935 2,3 %
-------------------------------------------------------------------------------
Total 451 221 100,0 % 380 469 100,0 %
-------------------------------------------------------------------------------
* The Fund's investments in bonds mainly consist of state and bank bonds. Their
credit quality has been determined using S&P credit rating. Most of the banks
that the Fund has invested in have good credit ratings. However, all regional
banks and companies do not have an official credit rating, in which case the
credit quality is defined by credit ratings received from a third party.
Investments in TVR's investment portfolio are diversified. Corporate risk cannot
exceed 30 % (2014: 30 %) of the Fund's fixed income investments. From 2016 on
the portion can be 25 % in maximum. In accordance with the investment plan,
investments in each issuer may not exceed 10 % (2014: 5 %) of the Fund's all
bond investments. Corporate investments are spread to 38 corporations on
31.12.2015, which corresponds to 18,6 % of all fixed income investments (30
corporations 31.12.2014; 18,9 % of all fixed income investments).
Money market investments are made in depository banks monitored by the Finnish
Financial Supervisory Authority, state debentures, municipal papers and
commercial papers issued by corporations accepted in the investment plan. Credit
ratings of the biggest Nordic banks are strong; not all corporations have credit
rating; and municipal risk corresponds to the state risk (in accordance with the
Finnish Financial Supervisory Authority).
Since the beginning of 2016, a rating requirement came into effect in respect to
investment portfolio's average rating that requires the average rating to be at
least A- (S&P). In 2015, there was no requirement in place for average rating of
the investment portfolio.
Counterparty risk is managed so that the Fund uses several asset managers and
dealers with good credit ratings. The Board of Directors approves every year the
dealers and counterparties the Fund uses in its investing activities.
4.1.3. Liquidity risk
The Fund aims to manage liquidity risk as follows:
1. Liquid investments
2. Short-term borrowing
3. Increase in insurance contribution
To secure its liquidity, the Fund has investments in liquid money market
instruments with less than a year's maturity the amount that equals the Fund's
one month's expenses.
When the investment buffer decreases below the above limit, the Fund uses short-
term borrowings to cover the temporary liquidity deficit. For this purpose, the
Fund has a commercial paper program totaling to EUR 300 million in place (2014:
EUR 300 M) and EUR 300 million Revolving credit facility (RCF) with six
commercial banks. In addition, the Fund has EUR 700 million committed credit
facility, guaranteed by the Government. Amounts in the table are in EUR
millions.
EUR
Committed credit facilities, not in use 31.12.2015 31.12.2014
-----------------------------------------------------------------------
Facilities, expiring within a year 110
Facilities, expiring after a year
RCF 300
Credit facility (guaranteed by the Government) 700
-----------------------------------------------------------------------
Total 1 000 110
-----------------------------------------------------------------------
Non-committed credit facilities, not in use 31.12.2015 31.12.2014
-----------------------------------------------------------------------
Commercial papers 88 134
-----------------------------------------------------------------------
Total 88 134
-----------------------------------------------------------------------
The net position of the Fund turned negative during 2015, whereupon the Fund
relied mainly on capital markets and on domestic markets for commercial papers
in financing liquidity. In the end of 2015, the Fund had the following loan
facilities and nominal amounts in use. Amounts are in EUR millions.
+-----------------+------------------+---------------+-----------+-------------+
|Loan | Nominal value| Interest rate|Expiry date|Credit rating|
| | 31.12.2015| (%)| | |
+-----------------+------------------+---------------+-----------+-------------+
|Bond - issuance 1| 600| 0,375|23.9.2019 |AA+ / S&P |
+-----------------+------------------+---------------+-----------+-------------+
|Bond - issuance 2| 300| 0,25|15.10.2018 |AA+ / S&P |
+-----------------+------------------+---------------+-----------+-------------+
|Commercial papers| 212| 0,16| |NR |
+-----------------+------------------+---------------+-----------+-------------+
|Total | 1 112| | | |
+-----------------+------------------+---------------+-----------+-------------+
The Fund has the following issuance credit ratings, confirmed by Standard &
Poor's (7.10.2015):
* Long-term credit rating AA+, negative outlook
* Short-term credit rating A-1+, negative outlook
*
At the end of 2015 the Fund had EUR 212 million (2014: 166) of the commercial
paper program in use, and short-term bank loans amounting to EUR 0 million
(2014: 90).
A breakdown of the Fund's loans is presented in note 15. The fixed interest rate
periods for loans in the statement of net position are as follows. Amounts are
in EUR millions. Liabilities for securities under settlement matured within a
couple of days from the reporting date.
+-----------------+-----------------------+----------------------+-------------+
|Loan | Nominal value| Fixed interest rate|Credit rating|
| | 31.12.2015| period, years| |
| | | 31.12.2015| |
+-----------------+-----------------------+----------------------+-------------+
|UIF bond 2019 | 600| 3,71 | AA+ / S&P|
+-----------------+-----------------------+----------------------+-------------+
|UIF bond 2018 | 300| 2,78 | AA+ / S&P|
+-----------------+-----------------------+----------------------+-------------+
|Commercial papers| 212| 0,26 | NR|
+-----------------+-----------------------+----------------------+-------------+
|Credit facilities| -| - | -|
+-----------------+-----------------------+----------------------+-------------+
|Total | 1 112| 2,80 | |
+-----------------+-----------------------+----------------------+-------------+
|Loan |Nominal value |Fixed interest rate |Credit rating|
| |31.12.2014 |period, years | |
| | |31.12.2014 | |
+-----------------+-----------------------+----------------------+-------------+
|Commercial papers| 166| 0,16 | NR|
+-----------------+-----------------------+----------------------+-------------+
|Credit facilities| 90| 0,11 | |
+-----------------+-----------------------+----------------------+-------------+
|Total | 256| 0,14 | |
+-----------------+-----------------------+----------------------+-------------+
In the following tables, UIF's financial liabilities are divided into groups
based on remaining contractual maturities.
-------------------------------------------------------------------------------
Maturities
based on Total cash Carrying
contracts of Under 6 flow based value assets
financial months 6 - 12 1 - 3 4-5 years on (-) /
liabilities moths years contracts liabilities
(tEUR)
31.12.2015
-------------------------------------------------------------------------------
Accounts 375 0 0 0 375 375
payable
Loans (exl.
finance lease 182 298 36 300 306 000 602 250 1 126 848 1 106 925
liabilities)
-------------------------------------------------------------------------------
Total 182 673 36 300 306 000 602 250 1 127 223 1 113 377
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Maturities
based on Total cash Carrying
contracts of Under 6 6 - 12 1 - 3 4-5 flow based value assets
financial months moths years years on (-) /
liabilities contracts liabilities
(tEUR)
31.12.2014
-------------------------------------------------------------------------------
Accounts 194 0 0 0 194 194
payable
Loans (exl.
finance lease 254 601 1 500 0 0 256 101 255 898
liabilities)
-------------------------------------------------------------------------------
Total 254 794 1 500 0 0 256 294 256 091
-------------------------------------------------------------------------------
4.2. Business cycle buffer
In accordance with the Section 3 of the Act on the Financing of Unemployment
Benefits, the Unemployment Insurance Fund maintains a business cycle buffer
generated from the difference between the Fund's income and expenses, in order
to safeguard the Fund's solvency and even out changes in unemployment insurance
contributions caused by predictable trend cycles in the national economy. The
maximum size of this buffer is the amount of annual expenses corresponding to an
unemployment rate of five per cent. During times of severe economic downturn,
the Fund may maintain a deficit equal to the amount of expenditure corresponding
to this unemployment rate.
According to the investment principles accepted by the Supervisory Board, the
Fund is required to have investments in liquid money market instruments with
less than a year's maturity the amount that equals the Fund's one month's
expenses. This amount is approximately EUR 300 million. The maximum amount of
the buffer is calculated by dividing the Unemployment Insurance Fund's annual
expenditures by the average unemployment rate for the year and multiplying the
result by 5. The following table presents the amount of the business cycle
buffer and the minimum and maximum amounts of the buffer as specified in the
law.
+----------------------------+----------+----------+
|MEUR |31.12.2015|31.12.2014|
+----------------------------+----------+----------+
|Business cycle buffer | -686 | -9|
+----------------------------+----------+----------+
|Maximum amount of the buffer| 1 521| 1 524|
+----------------------------+----------+----------+
|Minimum amount of the buffer| - 1 521| -1 524|
+----------------------------+----------+----------+
5. Unemployment insurance contributions
EUR
Employer's unemployment insurance
contributions 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Employer's insurance contributions 1 617 404 092 1 516 136 212
Employer's insurance contributions, co-owners 7 250 409 6 649 436
-------------------------------------------------------------------------------
Total 1 624 654 501 1 522 785 648
Employee's unemployment insurance
contributions 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Employee's insurance contributions 486 587 455 376 010 715
Employee's insurance contributions, co-owners 2 194 161 1 693 412
-------------------------------------------------------------------------------
Total 488 781 616 377 704 127
Interest on overdue contribution and
collection fee income 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Interest on employer's contributions overdue 1 059 459 1 228 834
Interest on employee's contributions overdue 435 480 403 348
Collection fee income 395 905 427 487
-------------------------------------------------------------------------------
Total 1 890 845 2 059 669
Liability component compensations of
employer's unemployment allowances 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Liability component compensations 49 921 012 51 704 180
Accruals 22 406 798 22 145 732
-------------------------------------------------------------------------------
Total 72 327 810 73 849 912
Compensations in accordance with the
Employment Contracts Act (ECA) 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Compensations and lay-off income according to
the ECA 1 429 338 1 348 739
Settlement to MSAH -650 540 -678 872
-------------------------------------------------------------------------------
Total 778 798 669 866
Contributions from MSAH 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Basic unemployment allowance 1 094 308 886 1 003 930 769
Job alternation compensation 46 577 696 49 914 770
Previous year's equalization payment 877 334 68 851
-------------------------------------------------------------------------------
Total 1 141 763 916 1 053 914 389
-------------------------------------------------------------------------------
Total unemployment insurance contributions 3 330 197 485 3. 030 983 611
-------------------------------------------------------------------------------
6. Benefit payments
EUR
Subsidies paid to unemployment funds (UIF) 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Other earnings-related allowance -1 081 374 679 -865 999 967
Additional day's allowance -245 077 479 -248 950 658
Lay-off allowance -295 438 292 -289 442 531
Professional education allowance 0 -160 201 999
Job alternation compensation -56 971 343 -63 814 596
Administrative expense compensation -13 542 505 -11 830 200
Membership fee equalization -10 000 001 -9 999 999
Previous year's equalization payment -825 630 -1 206 189
-------------------------------------------------------------------------------
Total -1 703 229 929 -1 651 446 140
Subsidies paid to unemployment funds (MSAH) 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Other earnings-related allowance -1 070 985 029 -840 376 119
Lay-off allowance 0 0
Professional education allowance 0 -142 390 516
Job alternation compensation -46 577 696 -52 220 845
Unemployment allowance/entrepreneurs -12 236 515 -9 196 359
Administrative expense compensation -11 087 342 -9 661 700
Previous year's equalization payment -877 334 -68 851
-------------------------------------------------------------------------------
Total -1 141 763 916 -1 053 914 389
Finnish Centre for Pensions 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Previous year's equalization payment -19 530 364 -24 897 945
Payment for the current financial year -880 000 000 -796 000 000
-------------------------------------------------------------------------------
Total -899 530 364 -820 897 945
State Pension Fund 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Previous year's equalization payment -431 857 -3 785
Payment for the current financial year -7 313 927 -6 113 286
-------------------------------------------------------------------------------
Total -7 745 784 -6 117 071
Social Insurance Institution of Finland (Kela) 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Previous year's equalization payment 143 260 138 758
Basic allowance, additional part, employment
programme additional benefit -120 935 000 -52 550 000
-------------------------------------------------------------------------------
Total -120 791 740 -52 411 242
Education Fund 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Previous year's equalization payment -17 551 0
Payment for the current financial year -97 680 000 -84 400 000
-------------------------------------------------------------------------------
Total -97 697 551 -84 400 000
Ministry of Employment and the Economy 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Previous year's equalization payment -36 072 3 556
Payment for the current financial year -20 470 111 -27 457 046
-------------------------------------------------------------------------------
Total -20 506 183 -27 453 490
Member State invoicing for unemployment
allowances 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Invoiced by Member State -57 314 -57 319
Invoiced by Fund 73 708 88 491
-------------------------------------------------------------------------------
Total 16 394 31 172
Administrative compensations paid to insurance
companies 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Administrative and supervisory compensations -1 059 670 -43 436
-------------------------------------------------------------------------------
Total -1 059 670 -43 436
-------------------------------------------------------------------------------
Total benefit payments -3 992 308 742 -3 696 652 542
-------------------------------------------------------------------------------
7. Administrative expenses
EUR
Personnel expenses 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Salaries and benefits -3 221 046 -3 351 576
Pension costs - defined contribution plans -726 899 -620 939
Social security costs -95 533 -214 931
-------------------------------------------------------------------------------
Total -4 885 226 -5 034 456
Personnel expenses, management salaries and
remuneration* 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
The Management Group (excluding the Managing
Director and his deputy) -357 275 -356 315
The Managing Director and his deputy -284 886 -288 037
The Board of Directors and the Supervisory
Board -76 975 -80 010
Pension costs - defined contribution plans -122 611 -122 649
-------------------------------------------------------------------------------
Total -841 747 -847 011
Other administrative expenses 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
IT expenses -777 148 -672 731
Other personnel expenses -632 434 -570 835
Expenses for office premises -1 064 133 -975 008
Office expenses -1 324 473 -1 489 224
Other expenses -613 182 -715 055
Depreciation and amortization -599 853 -997 316
Other income 201 202 1 157 826
-------------------------------------------------------------------------------
Total -4 810 021 -4 262 344
Auditor's fee 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Statutory audit -37 812 -18 600
Other fees -4 613 0
-------------------------------------------------------------------------------
Total -42 424 -18 600
-------------------------------------------------------------------------------
Total administrative expenses -9 737 672 -9 315 401
-------------------------------------------------------------------------------
Number of personnel
Employees 1.1.-31.12.2015 1.1.-31.12.2014
-------------------------------------------------------------------------------
Full-time employees 79 74
Part-time and temporary employees 22 24
-------------------------------------------------------------------------------
Total 101 98
* In the management salaries and remuneration specification in 2015, expenses
arising from social security systems are also included. Comparative information
from 2014 has been restated accordingly.
8. Finance costs
EUR
Finance costs from borrowings 1.1.-31.12.2015 1.1.-31.12.2014
---------------------------------------------------------------
Revolving credit facility fees -1 818 723 -733 901
Interest costs from borrowings -3 963 808 -62 819
---------------------------------------------------------------
Total -5 782 531 -796 720
---------------------------------------------------------------
Total finance costs -5 782 531 -796 720
---------------------------------------------------------------
9. Property, plant and equipment
Leasehold Machinery Total
improvements and
EUR equipment
-------------------------------------------------------------------------
Cost at 1.1.2015 1 012 928 1 008 871 2 021 799
Additions 0 78 327 78 327
-------------------------------------------------------------------------
Cost at 31.12.2015 1 012 928 1 087 198 2 100 126
-------------------------------------------------------------------------
Accumulated depreciation at 1.1.2015 -552 095 -694 432 -1 246 527
Depreciation for the period -108 431 -216 252 -324 683
-------------------------------------------------------------------------
Accumulated depreciation at 31.12.2015 -660 526 -910 684 -1 571 211
-------------------------------------------------------------------------
Net book value at 1.1.2015 460 833 314 439 775 272
Net book value at 31.12.2015 352 402 176 514 528 916
Leasehold Machinery Total
improvements and
EUR equipment
-------------------------------------------------------------------------
Cost at 1.1.2014 470 771 635 985 1 106 756
Additions 542 157 372 886 915 043
-------------------------------------------------------------------------
Cost at 31.12.2014 1 012 928 1 008 871 2 021 799
-------------------------------------------------------------------------
Accumulated depreciation at 1.1.2014 -115 786 -387 344 -503 130
Depreciation for the period -436 309 -307 088 -743 397
-------------------------------------------------------------------------
Accumulated depreciation at 31.12.2014 -552 095 -694 432 -1 246 527
-------------------------------------------------------------------------
Net book value at 1.1.2014 354 985 248 641 603 626
Net book value at 31.12.2014 460 833 314 439 775 272
10. Intangible assets
EUR Computer Internally Intangible assets in Total
software generated progress*
software
development
costs
Cost at 1.1.2015 514 197 639 379 0 1 153 576
Additions 51 504 734 790 686 307 1 472 602
-------------------------------------------------------------------------------
Cost at 31.12.2015 565 701 1 374 169 686 307 2 626 177
-------------------------------------------------------------------------------
Accumulated amortization -397 138 -497 294 0 -894 432
at 1.1.2015
Amortization -99 232 -175 938 0 -275 170
-------------------------------------------------------------------------------
Accumulated amortization -496 370 -673 232 0 -1 169 602
at 31.12.2015
-------------------------------------------------------------------------------
Net book value at 117 059 142 084 0 259 143
1.1.2015
Net book value at 69 331 700 937 797 057 1 567 325
31.12.2015
EUR Computer Internally Intangible assets in Total
software generated progress
software
development
costs
Cost at 1.1.2014 409 211 639 379 0 1 048 590
Additions 104 986 0 0 104 986
-------------------------------------------------------------------------------
Cost at 31.12.2014 514 197 639 379 0 1 153 576
-------------------------------------------------------------------------------
Accumulated amortization -275 021 -284 168 0 -559 189
at 1.1.2014
Amortization -122 117 -213 126 0 -335 243
-------------------------------------------------------------------------------
Accumulated amortization -397 138 -497 294 0 -894 432
at 31.12.2014
-------------------------------------------------------------------------------
Net book value at 134 190 355 211 0 489 401
1.1.2014
Net book value at 117 058 142 085 0 259 143
31.12.2014
* Intangible assets in progress include capitalized development costs and
composes an internally generated intangible asset. In 2015, capitalized
development costs comprise mainly of renewing the system for collecting
unemployment insurance contributions.
11. Receivables and payables from unemployment insurance contributions
EUR
Unemployment insurance contribution receivables 31.12.2015 31.12.2014
-------------------------------------------------------------------------------
Employer's unemployment insurance contribution
receivables 3 113 108 4 536 615
Employee's unemployment insurance contribution
receivables 2 147 683 1 422 788
Overdue contribution and collection fee receivables 277 214 227 557
-------------------------------------------------------------------------------
Total unemployment insurance contribution receivables 5 538 004 6 186 960
Unemployment insurance contribution payables 31.12.2015 31.12.2014
-------------------------------------------------------------------------------
Prepayments 42 999 980 41 447 947
Refunds 241 228 892 071
-------------------------------------------------------------------------------
Total unemployment insurance contribution payables 43 241 208 42 340 019
12. Other receivables
Non-current other receivables
EUR 31.12.2015 31.12.2014
-------------------------------------------------------------------------------
Other receivables 328 038 328 038
-------------------------------------------------------------------------------
Total non-current other receivables 328 038 328 038
Current other receivables
EUR 31.12.2015 31.12.2014
-------------------------------------------------------------------------------
Prepayments and accrued income 846 745 1 753 289
Finnish Centre for Pensions capital accrual 35 900 000 0
Finnish Centre for Pensions compensatory interest 25 035 153 18 292 645
Receivables from Education Fund 5 320 000 1 100 000
Receivables from unemployment funds 21 118 885 18 061 973
Ministry of Social Affairs and Health, accrual 32 830 582 22 930 769
Receivables from employer's liability component and
compensations based on Employment Contracts Act 6 440 588 3 695 071
Accrued credit facility fees 0 79 677
Advance payments 2 271 393 0
Receivables from the Government related to training
compensation 9 378 307 0
-------------------------------------------------------------------------------
Total current other receivables 139 141 653 65 913 426
13. Net gains from investment measured at fair value
Investment income and fair value gains
EUR 31.12.2015 31.12.2014
-----------------------------------------------------------------
Dividend income 0 9 789
Interest income 5 997 103 9 476 011
Other income 25 997 48 788
Gains on disposals 1 888 447 1 501 344
Foreign exchange gains 252 685 347 413
Fair value gains 856 374 0
-----------------------------------------------------------------
Total income from investments 9 020 607 11 383 345
-----------------------------------------------------------------
Investment expenses and fair value losses
EUR 31.12.2015 31.12.2014
-----------------------------------------------------------------
Interest expenses -1 921 917 4 962 734
Other expenses -70 763 -114 079
Losses on disposals -5 632 471 -12 674 340
Foreign exchange losses -72 581 -135 917
Fair value losses -352 519 511 779
-----------------------------------------------------------------
Total expenses from investments -8 050 251 -7 449 823
-----------------------------------------------------------------
-----------------------------------------------------------------
Total income and expenses on investments 970 356 3 933 522
-----------------------------------------------------------------
14. Investments
Investments in financial assets have been designated as financial assets at fair
value through profit and loss, and they are measured at fair value. Measurement
of these assets is largely based on either quoted prices or valuations based on
available market data. Financial instruments carried at fair value have been
divided into three hierarchy levels based on whether they are traded in active
markets, and to what extent the inputs are based on observable market data, as
follows:
Level 1: the valuation is based on quoted prices in active markets for identical
financial assets and liabilities.
Level 2: the inputs used in valuations are based also in other observable inputs
than those in Level 1, either directly or indirectly using valuation techniques.
Level 3: the valuation is based on other than observable market data.
In the table below investments have been specified by financial instrument
classes divided into fair value hierarchy levels. No reclassifications have been
made between hierarchy levels during the financial year.
EUR
31.12.2015 Level 1 Level 2 Level 3 Total
------------------------------------------------------------------------------
Government bonds 105 200 391 105 200 391
Bonds issued by banks 100 198 403 100 198 403
Corporate bonds 37 095 393 37 095 393
Investments in funds and shares 1 214 523 11 731 757 12 946 280
Mezzanine-funds 1 866 613 1 866 613
Deposits 15 942 046 15 942 046
Certificates of deposits 26 502 899 26 502 899
Municipal papers 25 024 080 25 024 080
Commercial papers 45 735 167 45 735 167
------------------------------------------------------------------------------
Total 243 708 711 124 935 949 1 866 613 370 511 273
------------------------------------------------------------------------------
EUR
31.12.2014 Level 1 Level 2 Level 3 Total
------------------------------------------------------------------------------
Government bonds 170 344 669 170 344 669
Bonds issued by banks 12 774 318 12 774 318
Corporate bonds 20 232 203 20 232 203
Investments in funds and shares 2 221 488 7 644 619 9 866 107
Mezzanine-funds 2 102 765 2 102 765
Deposits 31 242 818 31 242 818
Certificates of deposits 74 614 152 74 614 152
Commercial papers 60 712 778 60 712 778
Structured investments 2 977 200 2 977 200
------------------------------------------------------------------------------
Total 205 572 678 174 214 367 5 079 965 384 867 010
------------------------------------------------------------------------------
Changes in Level 3 financial assets measured at
fair value ( eur thousands )
Realized
Unrealized profit /
1.1.15 profit/loss Loss Purchases Disposals 31.12.15
-------------------------------------------------------------------------------
Structured
investments 2 977 0 23 0 -3 000 0
Investment
funds 2 103 -464 567 -304 -34 1 867
-------------------------------------------------------------------------------
Yhteensä 5 080 -464 589 -304 -3 034 1 867
-------------------------------------------------------------------------------
Realized
Unrealized profit /
1.1.14 profit/loss Loss Purchases Disposals 31.12.14
-------------------------------------------------------------------------------
Structured
investments 2 973 5 0 0 0 2 977
Investment
funds 2 055 -231 295 323 -339 2 103
-------------------------------------------------------------------------------
Yhteensä 5 028 -227 295 323 -339 5 080
-------------------------------------------------------------------------------
Deposits, certificates of deposit, corporate bonds and municipal papers in level
2 have been measured using the discounted cash flow method based on euribor or
swap curve and on forward rate so far as elements of foreign currencies are
involved. Based on the managements judgement, the discount factor has been
adjusted by the effect of change in credit risk of the investment. However, the
adjustment has not had a material impact.
Investments classified in level 3 are Mezzanine-funds that are valued based on
valuations prepared by the issuer. In the comparison year, structured
instruments in level 3 include a senior loan issued by a Nordic bank, with a
return that is linked to OMXH 25 index and fair values of them are based on the
valuation by a third party.
Investment funds have been measured at the net asset value of the fund as
reported by fund manager at the reporting date, and they have been classified in
level 1, 2 or 3 by their market activity and marketability. Equity investments
are quoted in Helsinki Stock Exchange and they have been classified in level 1.
The amount of equity investments is minimal.
15. Cash and cash equivalents
EUR
Cash and cash equivalents 31.12.2015 31.12.2014
------------------------------------------------------
Cash at banks 86 390 563 39 438 501
------------------------------------------------------
Total cash and cash equivalents 86 390 563 39 438 501
16. Borrowings
Long-term borrowings
EUR 31.12.2015 31.12.2014
---------------------------------------------------------------------
UIF bonds 897 635 070 0
---------------------------------------------------------------------
Total long-term borrowings 897 635 070 0
Short-term borrowings
EUR 31.12.2015 31.12.2014
---------------------------------------------------------------------
Commercial papers 211 568 649 165 835 931
Revolving credit facility (RCF) 0 90 000 000
Liabilities from securities under settlement 3 797 742 12 099 993
---------------------------------------------------------------------
Total short-term borrowings 215 366 391 267 935 925
17. Other liabilities
EUR 31.12.2015 31.12.2014
-------------------------------------------------------------------------------
Account payables 375 090 193 590
Accruals and deferred income 1 393 580 1 886 579
Liability component income, accrual 67 694 118 88 951 031
Finnish Centre for Pensions capital accrual 0 34 600 000
Ministry of Employment and the Economy, pay security
accrual 20 470 111 27 457 046
Finnish Centre for Pensions, interest accrual 24 946 407 19 657 281
Accrual for the Governments' pension fund 187 749 0
Liabilities to unemployment funds 17 003 017 23 273 699
Holiday pay accrual 645 534 607 516
Interest accrual 904 753 61 819
-------------------------------------------------------------------------------
Total other liabilities 133 620 359 196 688 561
18. Commitments and receivables not recognized in the statement of net position
Capital commitments, equity funds
EUR 31.12.2015 31.12.2014
------------------------------------------------
Committed capital 5 250 473 5 250 473
Utilized -4 729 539 -4 481 526
------------------------------------------------
Total capital commitments 520 934 768 947
Investment funds call investments based on the financing needs of the investment
fund. The commitments have no maturity date.
Operating lease commitments
EUR 31.12.2015 31.12.2014
--------------------------------------
Within one year 1 338 654 1 360 136
1-5 years 2 985 874 4 273 566
over 5 year 0 0
--------------------------------------
Total 4 324 527 5 633 702
The Fund has rented its office and warehouse premises and cars by non-
cancellable lease contracts. Term of the office and warehouse lease contract is
4 years, after which it is in force until further notice. The term of the lease
for the cars is 2 years.
Operating lease receivables
EUR 31.12.2015 31.12.2014
--------------------------------------
Within one year 415 754 413 568
1-5 years 935 446 1 344 096
over 5 year 0 0
--------------------------------------
Total 1 351 200 1 757 664
The fund has subleased part of its rented office premises. The first possible
termination date for the sublease contract is in 4 years, after which the
contract is in force until further notice.
19. Related parties
Related parties of the Fund consist of the Supervisory Board, the Board of
Directors and the Management Group. The Supervisory Board is appointed by the
government based on the proposal of the labour market parties. The proposal for
the level of unemployment insurance contributions is prepared by the Supervisory
Board in its fall meeting. The Board of Directors is appointed by the
Supervisory Board. The Unemployment Insurance Fund is supervised by the
Financial Supervisory Authority. In addition, the Ministry of Social Affairs and
Health is entitled to receive information about the operation of the
Unemployment Insurance Fund.
The government contributions payable to the unemployment funds is received from
the Ministry of Social Affairs and Health. The Fund pays regularly benefits to
the Finnish Centre for Pensions, State Pension Fund, Social Insurance
Institution of Finland (Kela) and the Ministry of Employment and Economy.
In 2015, UIF signed EUR 1 000 million credit facility agreements, which include
a guarantee from the Finnish Government of EUR 770 million. The guarantee is
issued based on the Act on Financing of the Unemployment Benefits (555/1998).
In the table below remuneration of the related parties is summarized, including
social security contributions. Detailed remuneration disclosures by governing
body are provided in the following tables.
Remuneration of the Board of Directors and the Supervisory Board
EUR 1.1.-31.12.2015 1.1.-31.12.2014
---------------------------------------------------------------------------
Salaries and benefits 76 975 80 010
Pension costs - defined contribution plans 13 981 14 144
---------------------------------------------------------------------------
Total 90 956 94 154
Remuneration of the Management Group members (excluding the Managing Director
and his deputy)
EUR 1.1.-31.12.2015 1.1.-31.12.2014
---------------------------------------------------------------------------
Salaries and benefits 357 275 356 315
Pension costs - defined contribution plans 61 146 61 420
---------------------------------------------------------------------------
Total 418 421 417 735
Remuneration of the Managing Director and his deputy
EUR 1.1.-31.12.2015 1.1.-31.12.2014
---------------------------------------------------------------------------
Salaries and benefits 284 886 288 037
Pension costs - defined contribution plans 47 484 47 085
---------------------------------------------------------------------------
Total 332 370 335 122
Fees and other benefits of the members of the Supervisory Board
On 27 November 2013, based on the proposal of the labor market parties, the
members of the Supervisory Board for the period from 1 January 2014 to 31
December 2016 were appointed by the Government. The Ministry of Social Affairs
and Health decides the remuneration for meetings for the Supervisory Board and
the principles of compensation for travelling expenses. On 17 January 2012, the
Ministry of Social Affairs and Health decided that the fees for the members of
the Supervisory Board are as follows: chairman EUR 120 per month and EUR 230 per
meeting, deputy chairman and other members EUR 140 per meeting. The Supervisory
Board assembled 3 times in 2015, including 1 meeting via e-mail. No fee is paid
for the e-mail meeting.
In 2015, the members of the Supervisory Board were paid fees as follows:
+---------------+----------------+----------------+----------------+-----------+
| | Meeting fee of| Monthly fee of|Compensation for| |
|Name | the member of| the Chairman of| travelling| 31.12.2015|
| | the Supervisory| the Supervisory| expenses|Total (EUR)|
| | Board| Board | | |
+---------------+----------------+----------------+----------------+-----------+
|Ann Selin, | 230| 1 440| | 1 670|
|Chairman | | | | |
+---------------+----------------+----------------+----------------+-----------+
|George Berner, | 280| | | 280|
|Deputy Chairman| | | | |
+---------------+----------------+----------------+----------------+-----------+
|Riku Aalto | 280| | | 280|
+---------------+----------------+----------------+----------------+-----------+
|Teija Asara- | 280| | | 280|
|Laaksonen | | | | |
+---------------+----------------+----------------+----------------+-----------+
|Jorma Haapanen,| | | | |
|member since | 280| | 282| 562|
|16 January 2015| | | | |
+---------------+----------------+----------------+----------------+-----------+
|Kimmo Hovi, | | | | |
|member since 1 | | | | 0|
|November 2015 | | | | |
+---------------+----------------+----------------+----------------+-----------+
|Tauno Kekäle, | | | | |
|member since 1 | 140| | | 140|
|August 2015 | | | | |
+---------------+----------------+----------------+----------------+-----------+
|Lauri Kivekäs | 140| | | 140|
+---------------+----------------+----------------+----------------+-----------+
|Ritva Laakso- | | | | |
|Manninen, | | | | 0|
|member until 1 | | | | |
|June 2015 | | | | |
+---------------+----------------+----------------+----------------+-----------+
|Salla | 280| | | 280|
|Luomanmäki | | | | |
+---------------+----------------+----------------+----------------+-----------+
|Jorma Malinen | 280| | | 280|
+---------------+----------------+----------------+----------------+-----------+
|Ilkka Mäkelä | | | | 0|
+---------------+----------------+----------------+----------------+-----------+
|Marjatta | | | | |
|Nummela, member| | | | 0|
|until 31 | | | | |
|October 2015 | | | | |
+---------------+----------------+----------------+----------------+-----------+
|Harri Ojanperä,| | | | |
|member since | 280| | | 280|
|12 March 2015 | | | | |
+---------------+----------------+----------------+----------------+-----------+
|Ari Svensk | 280| | | 280|
+---------------+----------------+----------------+----------------+-----------+
|Liisa Talvitie | 280| | 430| 710|
+---------------+----------------+----------------+----------------+-----------+
|Rauno Vesivalo,| | | | |
|member since | 280| | | 280|
|30 January 2015| | | | |
+---------------+----------------+----------------+----------------+-----------+
|Ritva Viljanen | 280| | | 280|
+---------------+----------------+----------------+----------------+-----------+
|Jaana Ylä- | 280| | 634| 914|
|Mononen | | | | |
+---------------+----------------+----------------+----------------+-----------+
|Antti Zitting | 280| | | 280|
+---------------+----------------+----------------+----------------+-----------+
|Total | 4 150| 1 440| 1 347| 6 937|
+---------------+----------------+----------------+----------------+-----------+
Fees and other benefits of the members of the Board of Directors
The Supervisory Board decides the remuneration of the members of the Board of
Directors. On 28 August 2014, the Supervisory Board decided that the fees for
the members of the Board of Directors are as follows:
+-----------------------------------------+-----------+-------------+
| |Fee |Fee |
| |EUR / month|EUR / meeting|
+-----------------------------------------+-----------+-------------+
|Chairman of the Board of Directors | 730| 270|
+-----------------------------------------+-----------+-------------+
|Deputy Chairman of the Board of Directors| 575| 165|
+-----------------------------------------+-----------+-------------+
|Other member of the Board of Directors | 330| 125|
+-----------------------------------------+-----------+-------------+
No other remuneration or supplementary pension arrangements are in place for the
members of the Board of Directors.
In 2015, the Board of Directors assembled 14 times, including 3 meetings via e-
mail. No fee is paid for the e-mail meeting.
In 2015, the fees for the members of the Board of Directors were paid as
follows:
+--------------------------+-----------+------------+-----------+
|Name | | | 31.12.2015|
| |Annual fees|Meeting fees|Total (EUR)|
+--------------------------+-----------+------------+-----------+
|Vesa Rantahalvari | 8 760| 2 970| 11 730|
+--------------------------+-----------+------------+-----------+
|Sture Fjäder | 6 900| 1 155| 8 055|
+--------------------------+-----------+------------+-----------+
|Pekka Hotti | 3 960| 1 000| 4 960|
+--------------------------+-----------+------------+-----------+
|Eeva-Liisa Inkeroinen | 3 960| 875| 4 835|
+--------------------------+-----------+------------+-----------+
|Markku Jalonen | 3 960| 1 250| 5 210|
+--------------------------+-----------+------------+-----------+
|Lauri Lyly | 3 960| 1 375| 5 335|
+--------------------------+-----------+------------+-----------+
|Miia Kannisto, | | | |
|member since 17 March 2015| 3 300| 1 125| 4 425|
+--------------------------+-----------+------------+-----------+
|Markus Mankin, | | | |
|member until 7 April 2015 | 990| 375| 1 365|
+--------------------------+-----------+------------+-----------+
|Antti Palola | 3 960| 1 000| 4 960|
+--------------------------+-----------+------------+-----------+
|Jorma Palola, | | | |
|member since 22 April 2015| 2 970| 875| 3 845|
+--------------------------+-----------+------------+-----------+
|Vuokko Piekkala | 3 960| 1 250| 5 210|
+--------------------------+-----------+------------+-----------+
|Veli-Matti Rekola | 3 960| 1 250| 5 210|
+--------------------------+-----------+------------+-----------+
|Seppo Saukkonen, | | | |
|member until 1 March 2015 | 660| 250| 910|
+--------------------------+-----------+------------+-----------+
|Saana Siekkinen | 3 960| 1 375| 5 335|
+--------------------------+-----------+------------+-----------+
|Total | 55 260| 16 125| 71 385|
+--------------------------+-----------+------------+-----------+
Remuneration of the Managing Director and key management personnel of the Fund
There is no separate compensation arrangement for the Managing Director. The
Board of Directors decides annually on a possible compensation. Other key
management personnel have a compensation arrangement approved by the Board of
Directors. Based on the proposal of the Managing Director and in accordance with
confirmed compensation criteria, the Board of Directors decides on a possible
compensation for the key management personnel.
The salaries and other benefits and fees of the Managing Director and key
management personnel are provided in the following table. The social security
contributions are excluded.
-------------------------------------------------------------------------------
Salaries and Variable
Position other performance fee 1.1.-31.12.2015 1.1.-31.12.2014
benefits
-------------------------------------------------------------------------------
Managing 10 825 140 725 146 021
Director 129 900
Key management 21 238 470 982 471 038
personnel 449 744
-------------------------------------------------------------------------------
Total 579 644 32 063 611 707 617 059
-------------------------------------------------------------------------------
Terms of the service contract of the Managing Director
The terms of the service contract of the Managing Director have been determined
by a decision of the Board of Directors and verified with a written agreement.
The retirement age and pension accrual of the Managing Director is based on
general employment pension legislation. The Fund has not provided a
supplementary pension arrangement for the Managing Director. The notice period
of the Managing Director is based on employment contract act, on each side.
20. Events after the reporting period
The unstable state of economy has continued in the beginning of 2016. The amount
of unemployed jobseekers is estimated to continue to increase during 2016
compared to the previous year, although the growth in unemployment rate could
slow down. The Unemployment Insurance Fund estimates that the amount of paid
unemployment benefits will increase during 2016 compared to the previous year.
The Unemployment Insurance Fund's liquidity has been relatively good, due to the
front-loaded nature of insurance contributions, as well as the increases made to
the unemployment insurance payments in the beginning of the year. The Fund has
continued the implementation of the debt-management plan approved in November
2015. The need for debt financing will become clearer during the spring.
The determination and collection of unemployment insurance contributions has
gone as planned. The level of service in the insurance contribution's customer
service has been excellent despite the peak season at the end of the year. The
use of electronic services has increased significantly. The level of service in
the collection has been good.
3. Signatures for the annual review and for the financial statements
Helsinki, 17 March 2016
Sture Fjäder Vesa Rantahalvari
Chairman of the Board Vice-Chairman
Jyrki Hollmén Eeva-Liisa Inkeroinen
Markku Jalonen Miia Kannisto
Antti Palola Jorma Palola
Vuokko Piekkala Joonas Rahkola
Veli-Matti Rekola Saana Siekkinen
Janne Metsämäki
Managing Director
Additional information:
Janne Metsämäki, Managing Director. tel. +358 40 522 3614
Tapio Oksanen, Deputy Managing Director, CFO tel. +358 40 539 4651
Helsinki, 23 March 2016
Unemployment Insurance Fund (TVR)
Tapio Oksanen
Deputy Managing Director
Distribution:
NASDAQ OMX Helsinki
Media
www.tvr.fi
[HUG#1996338]
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