Iceland’s Frjálsi Pension Fund and the Pension Fund of the Icelandic Dental Association (LTFÍ) have signed an agreement to merge the pension funds, continuing the long-term trend of consolidation in Iceland’s pensions market.

Under the agreement, Frjálsi will take over all LTFÍ’s assets and liabilities from 31 December 2025. It will also start receiving premiums and paying pensions to LTFÍ’s members.

The merger is subject to approval by the LTFÍ members at their November meeting and subsequent confirmation by the Icelandic Ministry of Finance, which must endorse the proposed amendments to the fund’s articles of association.

As of 30 September 2025, Frjálsi’s assets were approximately ISK 562bn, while LTFÍ held around ISK 11bn in assets.

The negotiations for the merger began at the end of June 2025, after which a detailed review was carried out to see if the merger was feasible.

Both pension funds’ boards of directors believe the merger will strengthen the funds and benefit their members, due to the similarities in the structure of the funds.

For example, members’ required contributions are split between private pensions and mutual insurance.

Commenting on the agreement, Frjálsi Pension Fund chairman of the board of directors, Ásdís Eva Hannesdóttir, thanked the board of LTFÍ for the “trust it has shown in Frjálsi Pension Fund by requesting the merger of the funds”.

“With the merger, LTFÍ fund members will become part of a strong pension fund with almost 80,000 fund members,” she said. “We will work with the fund's manager, Arion Bank, to provide dentists with excellent service and deliver good returns.”

Adding to this, LTFÍ chairman of the board, Sigurgísli Ingimarsson, said after “thoroughly” reviewing various options since January 2025, including keeping the fund as it is or merging with another comparable pension fund, the board of directors of LTFÍ decided to start merger talks with the Frjálsi Pension Fund.

“I am convinced that we have chosen the best option in the situation with the interests of the fund members at heart. We are merging with a large pension fund with a history of good and successful operations,” Ingimarsson continued.

“At Frjálsi, the emphasis is on strong asset and risk management, freedom of choice and ambitious digital services that will benefit LTFÍ fund members in the future.”

This agreement to merge follows a wider long-term trend of Icelandic pension funds consolidating, with Akureyri Employees' Pension Fund and Brú Pension Fund confirming they have merged earlier this month, following board approval.

This was Brú’s second acquisition within a year, as at the beginning of 2024, it merged with the Reykjavík City Employees' Pension Fund.

In addition to Brú’s mergers, in September, Lífsverk and Almenni signed a merger agreement to create an ISK 667bn fund from 1 January 2026.

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