Pension funds in Iceland returned –3% in 2002, according to the Financial Supervisory Authority, or FME. But the position has turned around last year, says pension funds association.
“The net real rate of return in 2002 was negative by 3%,” the FME said in its 2003 annual report.
The FME added that 12 of the 43 pension funds not guaranteed by other parties had an operating surplus at the end of 2002. Four had a deficit of more than 10%, while 18 had a deficit between 5.1% and 10%; nine had a deficit of up to 5%.
The net assets amounted to IKr678.9bn (E7.6bn), up from E644.7bn a year earlier. As at July 1 there were 50 pension funds in total, though 11 no longer receive premiums.
Icelandic pension funds have had a very good real return in 2003, between six and 10%”, according to Hrafn Magnusson, manager of the National Association of Icelandic Pension Funds, in Rekjavik.
He added that it was unlikely that any fund without a guarantee would have a deficit larger than 10% at the end of last year.
The FME added that during the year it began three investigations into pension funds – two of which have been completed. “On one occasion the FME handed over its findings and documents to the National Commissioner for the Icelandic Police.”
The FME added that just over a third of Iceland’s pension funds have amended their articles of association. “Some curtailment of rights has taken place, either in the form of changes to multiplication factors or to the periods for pension payments.”
It said that this was in part due to the fact that some funds “deviated from the legal limit between assets and pension commitments”.