Iceland’s Almenni-Lífsverk Pension Fund and SL Pension Fund have announced they have begun merger talks.

The boards of the pension funds said they have decided to “begin exploratory negotiations on a possible merger”.

The talks are aimed at examining whether a merged fund would create a stronger basis for favourable and secure pension rights for both funds, improve services to members and whether synergy effects lead to streamlining of operations.

If the merger were to take place, the merged fund would be the fourth-largest pension fund in Iceland, with total assets of ISK 1,035bn, based on the asset position at the end of last year.

The funds confirmed that negotiations are at an early stage but are expected to be concluded by mid-summer.

If an agreement between the pension funds is reached, proposals for the merger and amendments to the articles of association will be submitted to board and member meetings in autumn, with the aim of the funds merging on 1 January 2027.

Proposals for mergers and amendments to the fund’s articles of association are subject to the approval of the Icelandic Ministry of Finance and Economic Affairs, following a report from the Financial Supervisory Authority.

The SL Pension Fund operates under its own legislation, Act No. 155/1998, which was established to ensure the proper functioning of the pension fund.

The law provides the fund’s purpose and organisational framework, including the operation of its departments and the rights of its members.

As a result, the proposed merger will also require amendments to this Act. Discussions regarding these changes have already commenced with the Ministry of Finance and Economic Affairs.

The merger will also be notified to the Competition Authority.

This news comes at a time of increasing consolidation in the Icelandic pension market, with the number of funds now totalling fewer than 20, down from between 87 and 96 funds in 1980.

In the past 18 months alone, several funds have announced mergers or the intention to merge.

Brú Pension Fund merged with the Akureyri Employees’ Pension Fund in 2025, while Lífsverk and Almenni combined in early 2026 to form Lífsverk-Almenni Pension Fund.

Frjálsi Pension Fund also completed a merger with the Pension Fund of the Icelandic Dental Association and recently confirmed it will merge with the Farmers' Pension Fund, a move expected to be completed before the end of the year.

However, not all negotiations have resulted in mergers. Earlier this year, Lífeyrissjóður verzlunarmanna (The Pension Fund of Commerce) and Birta Pension Fund conducted exploratory talks over a potential merger.

However, the funds confirmed last month that they would not proceed to formal negotiations at this stage.

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