ICELAND - The Icelandic Pension Funds Association (IPFA) has agreed to arrange an independent investigation into the working methods and investment policies of pension schemes in the period before the economic collapse following public criticism of their actions. 

Pension schemes in Iceland have been facing questions over their investment operations and policies after reports that some funds are planning to cut pension rights as a consequence of the economic situation. This follows an earlier report by the Icelandic Parliament on the financial crisis, which did not place any blame on the pension funds' behaviour but did criticise the lack of a code of professional conduct.

In the wake of these comments the Icelandic Confederation of Labor and the Confederation of Icelandic Employers, organisations that support Icelandic pension funds, have been considering the need to respond to the criticism by conducting a through review of scheme operations and investments to prove there is "nothing to hide".

Therefore at last week's annual general meeting of the IPFA, which represents 33 pension funds with approximately ISK 1.6bn (€9.9m) of assets, the pension fund association agreed to organise an independent investigation committee, with the IPFA board setting out the formal appointment process for the committee members.

The IPFA stated its board will "ensure that the investigative committee would do a thorough and precise job, so that its findings could not be questioned, and so that ideas for improvement could be implemented, promoting peace around the pension system, and to rebuild trust".

It is expected that once the committee is in place a report on its findings will be ready by the end of October 2010.

The new investigation committee comes just a month after the IPFA completed its own analysis of the financial crisis and put forward a number of recommendations to allow pension schemes to protect their interests in "more active and varied ways".

Proposed actions put forward by that committee, chaired by Stefan Halldorsson, former chief executive of the Engineers Pension Fund, included more disclosure from the stock exchange on the issuers and scale of trading of listed securities alongside improved corporate governance in companies. (See earlier IPE article: Icelandic schemes to learn from financial crisis)