Three in four Finnish decision-makers think retail investing should be supported, not hampered with higher taxation

“It is excellent news that Finnish decision-makers understand the broader value of saving and retail investing. Enabling the extensive participation of small investors in the capital market is important because investment assets and savings provide security for citizens and support the society’s risk-bearing capacity”, says Finance Finland’s Managing Director Piia-Noora Kauppi.

Kauppi highlights that tightening the taxation of investments would undo much of the work done to promote private ownership and wealth creation in Finland.

Support for the promotion of saving and investment was fairly strong across the political spectrum. It was highest in the biggest party, National Coalition, where 94% of the respondents agreed that the taxation of investments should not be increased. Among the other two major Finnish parties, support was at 57% in the Social Democrats and at 54% in the Finns Party. Among smaller parties, the promotion of private ownership and wealth creation was supported by 84% of the Centre Party, 57% of the Greens and 50% of the Left Alliance.

Decision-makers’ confidence in the financial sector is growing

The financial sector’s role in and importance for the Finnish national economy are significant. Banks and insurance companies are among the country’s biggest taxpayers. The financial sector directs economic savings to various investments, helps prevent risks and takes care of everyday payments transmission. In the survey, 67% of Finnish decision-makers said they were satisfied with the performance of banks, life and non-life insurers, employee pension companies, finance houses, fund management companies and securities dealers operating in Finland. Of the 67%, ‘very satisfied’ was picked by 17% of the respondents and ‘somewhat satisfied’ by 50%.

Kauppi is delighted to see that decision-makers’ confidence in the sector has improved in recent years. In a similar survey conducted in 2014, 58% of the respondents reported being either very or somewhat satisfied with the sector.

“Financial sector regulation not only impacts the competitiveness, customers and services of the sector’s companies but also the entire national economy of Finland. Political decision-makers expressed strong support for Finance Finland’s objective that the next government should commit to keeping financial sector regulation on a sensible and moderate level and avoiding new national requirements that encumber the sector”, comments Kauppi.

EU legislation must also consider small countries and diverse markets

The statement “EU legislation must be based on high-quality impact assessment that also considers small countries and the specificities of different markets” was supported by 83% of the respondents. Among the Social Democrats, the National Coalition and the Centre Party, up to 90% were in favour of the sentiment.

Implementing stricter financial sector regulation in Finland than in other EU member states was opposed by 68% of the surveyed decision-makers. When asked whether Finland should introduce additional national regulation, respondents’ views were slightly more divided across the political spectrum: 93% of the Centre Party but only 52% of the Social Democrats were opposed to new national requirements. The Greens were the most favourable towards additional national regulation: 57% of their respondents supported the idea of introducing new national requirements.

In Kauppi’s opinion, Finnish decision-makers and authorities should actively defend the interests of the financial sector and its customers in EU negotiations. “Finland must promote regulation that is based on the Nordic market economy thinking and avoid excessive measures that extend regulation to areas typically beyond our regulatory culture.”

“Companies’ decisions about their own strategies and business processes are protected under the constitutional freedom of trade provisions. Financial sector regulation should not interfere with these basic principles by non-legislative measures. Even legislative means should be only used under exceptional and highly specific circumstances”, emphasises Kauppi.

Personal pension savings must be available for withdrawal immediately upon retirement and equity savings account limits must be doubled

About 600,000 Finns have personal pension policies. For a while, private pension saving was rising in popularity, but legislative amendments made since have unfortunately suffocated Finns’ interest in it. Private pension savings cannot currently be withdrawn immediately at retirement. ​

About 65% of the decision-makers interviewed in the survey agreed that when a person retires and is eligible for earnings-related pension, they should be allowed to withdraw their voluntary personal pension savings straight away. Current legislation only allows them to be withdrawn at the age of 68–70, later than the official age for earnings-related pension. Allowing personal pension savings to be withdrawn upon retirement received the highest support among the National Coalition Party (76%) and the Green Party (75%). Among the Centre Party, support for this notion was 67% and among the Social Democrats, 61%.

Equity savings accounts are another excellent way to save and invest. By having an equity savings account, the investor can avoid multiple taxation of their investments. About 68% of the decision-makers responding to the survey agreed with Finance Finland in that the maximum limit of €50,000 currently set for equity savings should be doubled in size. Raising the limit was supported by 94% of the National Coalition, 77% of the Centre Party and 63% of the Green Party. About 50% of the Social Democrats and the Left Alliance were in favour of raising the maximum limit of funds on an equity savings account to €100,000.