The Icelandic National Association of Pension Funds (Lífeyrismál) has called on the government to approve measures that would reform investment rules for pension funds before the end of the spring parliamentary session.

The amendments to the Act on Mandatory Pension Insurance and the Activities of Pension Funds relate to pension funds’ investment authorisations.

Lífeyrismál argued that the current legal framework of quantitative restrictions focused more on the form of investments rather than the substance, nature, and underlying risk of investments.

Furthermore, it highlighted that the current framework applied equally to all pension funds, regardless of their size, duration of commitments, and risk profile.

The association therefore urged the government to approve the reforms, which would place greater emphasis on the ‘prudential principle’, which it believed would enable greater risk awareness and opportunities to adjust pension fund portfolios to different risk profiles, with the long-term interests of members as a guiding principle.

"I say without hesitation that it is extremely urgent that this government bill be enacted before the Althingi takes its summer recess,” said Lífeyrismál board chair, Jón Ólafur Halldórsson.

“There are glimmers of hope in the Icelandic economy and it is important that our strong and powerful pension system has the opportunity to intervene so that the wheels of the economy and industry turn firmly and surely, for example by involving pension funds in new infrastructure projects.

"I simply assume that the government and the Althingi clearly understand the importance of the announced changes to pension funds' investment authorisations being approved in the current spring session."

Lífeyrismál’s annual meeting also revealed the real return on Icelandic pension fund assets in 2025 was 2.6 per cent, down from 6.7 per cent in 2024.

The average return over the past 10 years was 3.7 per cent, but 1.8 per cent over the past five years.

Total assets in the pension system were ISK 8,878bn at the end of 2025, around 190 per cent of the country’s estimated GDP in 2024.

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