Iceland's Brú Pension Fund achieved a real return of 7.8 per cent in 2024, its annual report has revealed, up from a return of 2.4 per cent in 2023.

The pension fund's nominal return was 12.9 per cent, a 2.3 percentage point increase from the previous year.

Brú's report noted "considerable market fluctuations" in 2024 across domestic and foreign financial markets and high domestic inflation.

However, returns on foreign equity markets continued to be strong, while domestic equities fell in the year's first half but rose again in the second half.

Assets under management at the year-end amounted to ISK 557.2bn, compared to ISK 393.2bn at the end of 2023 – an increase of ISK 164.0bn.

Furthermore, the average return over the past five years is 2.3 per cent and over the past 10 years 3.7 per cent, which is just above the benchmark set by pension funds, which are expected to achieve an average annual real return of 3.5 per cent.

At the beginning of 2024, the pension fund merged with the Reykjavík City Employees' Pension Fund (LsRb), which resulted in the creation of a new department at Brú, the R Department, which manages LsRb's operations, assets, liabilities, and obligations.

The net assets of LsRb at the beginning of the year were ISK 91.6bn, which were merged with Brú's assets.

Premiums amounted to ISK 30.7bn in 2024, of which ISK 6.3bn was due to additional contributions, and up from ISK 30.0bn in 2023.

The fund paid out ISK 21.4bn in pensions during the year, a significant increase from ISK 12.1bn the previous year. On average, 16,315 individuals received pensions from Brú in 2024

Meanwhile, the annual report also provided information on the percentage of the fund's assets considered 'green assets' per the EU Classification Regulation.

The report found that the fund's green asset ratio ranged from 1.0 to 3.1 per cent at year-end across its divisions.

It is calculated based on the turnover or investment fees of the underlying companies and includes all of the fund's investment assets, excluding assets with a government guarantee.

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