The boards of Icelandic pension funds Frjálsi Pension Fund and the Farmers' Pension Fund (LSB) have signed an agreement to merge.

The merger proposal will be submitted for confirmation at the annual meeting of LSB in June.

It is subject to approval by the Competition Authority and confirmation by the Ministry of Finance and Economic Affairs of amendments to the funds' articles of association.

Merger negotiations began in the autumn of 2025 and, after conducting due diligence and a feasibility assessment, the boards of both pension funds believed the merger would strengthen the operating basis and benefit the members of both funds.

The pension funds said the aim of the merger was to use economies of scale to reduce operating costs, enhance service and information provision, and reduce operational risk, while strengthening the funds’ asset and risk management.

The pension funds’ combined assets would be around ISK 672bn, as at 30 April, comprising ISK 626bn from Frjálsi and ISK 46bn from LSB.

Through the merger, Frjálsi will take over all rights and obligations towards LSB members, while the acquired rights of LSB members will initially be managed in a closed insurance department.

"I am grateful for the trust that the board of the Farmers' Pension Fund has shown in Frjálsi and am pleased that the boards have now approved the merger of the funds,” commented Frjálsi chair, Ásdís Eva.

“With the merger, the fund members of the Farmers' Pension Fund will become part of Frjálsi's strong fund member group, and the merged fund will serve over 85,000 fund members.

“We will continue to place great emphasis on good and personal service. The merger lays a solid foundation for a strong future with the interests of all fund members as our guiding principle."

LSB board chair, Vala Valtýsdóttir, added: "I am pleased that the board merger negotiations have been concluded with the conclusion that the funds will merge.

“It is in the best interests of the Farmers' Pension Fund to merge with a large fund like Frjálsi, which also has a strong operating and asset management partner, Arion Bank, which provides good service to fund members.

“We on the board of the Farmers' Pension Fund hope that the merger will go down well with fund members and that they will confirm it at the annual meeting in June.

“The board also believes that the merger of the funds will lay a solid foundation for the continued development of a strong pension fund."

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