Frjálsi Pension Fund and Iceland’s Farmers’ Pension Fund (Lífeyrissjóður bænda, LSB) have announced that their boards have signed a letter of intent to start formal discussions on a possible merger.
In Friday’s statement, the funds said: “The decision is being made after the funds’ actuarial assessment of the feasibility of a merger, which is considered positive for the fund members of both funds.”
The development may herald the latest in a flurry of mergers taking place in the Icelandic pension fund sector, which has been steadily consolidating over the past few decades.
If a merger between Frjálsi and LSB goes ahead, it would increase the total assets of the larger fund, Frjálsi, to ISK622bn (€4.2bn) from ISK576bn, according to central bank figures, and reduce the number of Icelandic pension funds to just 16.
Frjálsi and the Farmers’ Pension Fund said: “The goal of the merger is to utilise economies of scale to reduce operating costs, enhance service and information provision to fund members and employers, reduce operational risk and at the same time strengthen the funds’ asset and risk management.”
The two pension funds said they aimed to conclude the merger talks before the end of the year.
If they agree, they would then call an extraordinary annual general meeting at the Farmers’ Pension Fund, where a merger proposal would be submitted to fund members.
Only 10 days ago, Frjálsi’s merger with the smaller Icelandic Dental Association Pension Fund (LTFÍ) was approved by members.
At the same time, a merger between pension funds Almenni and Lífverk won member approval.
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