Icelandic pension funds Frjálsi Pension Fund and the Farmers’ Pension Fund (LSB) have merged.

The merger follows approval by the Icelandic Competition Authority and confirmation by the Ministry of Finance and Economic Affairs of amendments to the funds’ articles of association.

All LSB assets and members’ accrued pension rights have now been transferred to Frjálsi Pension Fund.

The intention to merge was announced in May, but merger negotiations began in autumn 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 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 will total around ISK 622bn, based on assets as of 31 October, with Frjálsi's at ISK 576bn and LSB’s at ISK 46bn.

Frjálsi Pension Fund warmly welcomed new fund members to the group.

This merger comes amid a broader wave of consolidation in Iceland’s pension market over the past two years.

Several other funds have also joined forces during this period. Brú Pension Fund merged with the Akureyri Employees’ Pension Fund in 2025, while Lífsverk and Almenni combined in early 2026 to form the Almenni-Lífsverk Pension Fund.

The trend continued in July, when SL Pension Fund and Almenni-Lífsverk signed a merger agreement, followed in September by an agreement between the boards of Gildi Pension Fund and Festa Pension Fund to merge.

Frjálsi itself confirmed in May that it had merged with the Pension Fund of the Icelandic Dental Association (LTFÍ), marking another step in the ongoing market consolidation.

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