The number of pension funds in Iceland’s pension system – second best in the world according to the Mercer CFA Institute Global Pension Index – is continuing to fall.
Last week, Brú Pension Fund announced it had agreed to merge with LSA pension fund, as the sector consolidation continues. In this case, the smaller LSA, which covers municipal employees in the northern town of Akureyri, will form a new division within Brú, which only last year absorbed the Reykjavik Employees’ Pension Fund.
A year ago, pension funds Almenni and Lífsverk signed a deal to merge.
Speaking at the IPE Iceland event in Reykjavik last week, experts including Björn Ásgrímsson, senior risk analyst for financial stability at the Icelandic central bank, discussed proposed changes to the investment rules for Icelandic pension funds, including the merits of the “prudent person principle” compared to quantitative asset exposure limits.
In Sweden, the relative calm that has prevailed so far around the ongoing reform of the national pension system was broken when a dispute erupted between two of the system’s buffer funds that are set to merge.
After discovering that AP2 – the only one of the big four general buffer funds to be based in Gothenburg – planned to place more than 70% of the assets of AP6, the smaller, specialist private equity buffer fund, in a wind-down portfolio without staffing, AP6’s board wrote to AP2 saying this was not in line with what had been decided upon by parliament.
“AP2 is saying we want to do it our own way, we don’t need those resources, we don’t need those processes, and we don’t need anything that AP6 does,” Katarina Staaf, CEO of AP6 told IPE. AP6 is also based in Gothenburg, while the other large buffer funds, AP1, AP3 and AP4, are located in Stockholm.
For its part, AP2 has said that since parliament decided its mandate was unchanged, as a diversified buffer fund its asset allocation had to be based on an ALM analysis of what was best for the pension system.
Items to note:
In the September/October 2025 issue of IPE’s newly redesigned magazine, executive editor Liam Kennedy considers in his leader the strengths of the Swedish equities market. That market has bucked the global trend of falling public equity market listings, and Kennedy asks whether Europe should follow Sweden’s example on policy.
Iceland’s largest pension fund LSR has been recognised by a project backed by the Association of Businesswomen in Iceland (FKA) once more for its gender ratio among managers. The “Balanced Scale” award is given to companies and institutions that meet the project’s goal of a 40/60 gender ratio, according to LSR.
Rachel Fixsen
Nordic Correspondent
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