Two Icelandic pension funds, Lífsverk and Almenni, have signed a merger agreement to create an ISK 667bn fund.

The boards of directors of both funds have signed an agreement to launch the new pension fund on 1 January 2026.

Founded in 1954, Lífsverk is one of Iceland’s oldest pension funds, originally limited to engineers but since 2016 open to all university graduates.

Almenni, established in 1965, is an open pension fund serving a broad range of professions, including architects, doctors, musicians, technicians and tourist guides.

The agreement is subject to the approval of the merger proposals by the fund members' meetings and the approval of amendments to the articles of association of both funds by the Ministry of Finance and Economic Affairs.

If approved, the new fund will be Iceland’s fifth largest, with ISK 667bn in assets (based on figures at 31 December 2024).

It follows a long-term trend of consolidation in the Icelandic market. A recent report published by the Central Bank of Iceland noted that 96 funds operated in 1980 but just 21 remain, which would drop to 20 once this is approved.

The three largest pension funds control around half of the total pension fund assets in Iceland.

In a statement, Lífsverk and Almenni said the consolidation of the funds “aims to create a stronger foundation for good pension rights and create a larger fund that will be better able to meet increased demands and provide better service”.

“The goal is also to achieve operational efficiency that can contribute to lower costs and higher returns for fund members,” the funds stated.

The funds originally announced their intention to merge in March 2025, after signing a letter of intent to begin formal discussions on merging.

Proposals will be presented at member meetings in October and formally voted on between 11-13 November via electronic ballot.

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