The average real return of Icelandic pension funds in 2025 for both collective schemes and individual savings was 2.6 per cent, according to the Icelandic Pension Funds Association (LL).

The preliminary figures are based on a weighted average of the entire asset portfolio of Icelandic pension funds.

Looking over the longer term, the average real return over the past 10 years is around 4 per cent, LL said.

Over the past five years, the figure is 2.8 per cent. The association said the figures reflect a steady performance despite fluctuations in individual years.

LL said it will publish final figures later in the year when the funds’ annual financial statements become available.

Last week, the Icelandic pension funds Birta and Lífeyrissjóður verzlunarmanna (The Pension Fund of Commerce, LV) announced they have begun merger talks.

The boards of the two pension funds said they were having “exploratory discussions” to assess the feasibility of a possible merger of the funds.

“The pension funds have a long and successful operating history that has delivered solid benefits to their fund members and contributed to financial security upon retirement,” the boards stated.

The discussions will centre on whether there is a basis for initiating formal discussions on merging the funds.

---