Icelandic pension funds have seen their supervisory fees increase by 154 per cent over the past two decades, despite the number of funds falling by more than half during the same period, according to Icelandic Pension Funds Association chair of the board, Jón Ólafur Halldórsson.

In an article originally published in Icelandic business newspaper Viðskiptablaðið, Halldórsson stated that, adjusted for January 2026 prices, 43 pension funds paid a combined ISK 196m in supervisory fees in 2006, while fewer than half that number of funds paid ISK 486m at the beginning of 2026.

The 2026 figure rises to ISK 500m when taking into account additional fees for suitability assessments of managing directors and board members introduced at the end of 2025.

The increase in fees comes amid a high number of mergers among Icelandic pension funds over the same period, as pension funds sought to achieve cost efficiencies for members.

Halldórsson stated that consolidation should have reduced the Financial Supervisory Authority’s workload, with fewer reports, annual accounts, suitability assessments and fund rule amendments requiring review.

However, supervisory fees have not kept pace with this development. He argued that there has been no comparable increase in the authority’s responsibilities to justify the higher fees.

“The main legislation governing pension fund operations has not been amended in recent years in a way that would justify a significant increase in the authority’s responsibilities.

"Furthermore, the regulatory framework for Icelandic pension funds is largely domestic and has limited links to European Union financial market regulation, which has expanded considerably in recent years and has been cited by the Central Bank as justification for many new tasks,” he wrote.

Halldórsson added that an expansion of anti-money laundering requirements did not justify the rise in fees, noting that pension funds are classified in the lowest money laundering risk category by Iceland’s National Commissioner of Police.

He described the inclusion of pension funds under the anti-money laundering framework as “gold-plating” that warranted separate consideration.

He also highlighted that pension funds’ own oversight frameworks have strengthened in recent years, with dedicated risk management functions, internal and external auditors, and independent actuaries providing extensive monitoring of fund operations and financial positions.

He argued that this level of internal oversight should reduce, rather than increase, the need for public supervision.

The debate comes as Iceland’s Fiscal Plan for 2027–2031 proposed an ISK 535m increase in funding for the Financial Supervisory Authority’s operating costs, despite a broader government focus on fiscal restraint.

“In discussions about increasing charges on pension funds, it should be remembered that membership of Icelandic pension funds is mandatory. It is reasonable that pension funds are subject to public supervision and that they pay for this, but members are equally entitled to expect their money to be managed responsibly.

“There must be a clear relationship between supervisory fees and the responsibilities carried out by the Financial Supervisory Authority. It is unreasonable for supervisory fees to continue increasing at the same time as the number of pension funds declines,” he concluded.

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