Iceland’s third-largest pension fund, Gildi, and Festa, the ninth biggest, have agreed to merge, creating the second-largest in asset terms and the largest by far ranked by membership.
In a joint statement on Friday, the pension funds said their boards of directors had approved an agreement on the merger that day, with dates set for extraordinary annual general meetings in early November to confirm the plan.
Gildi and Festa said in the statement: “The joint assessment of the boards of the funds is that the merger can create a variety of benefits for the fund members of both funds.”
Those benefits included increased economies of scale, a stronger operating basis, robust service to fund members and a greater capacity for technological and digital development, they said.
“In the opinion of the boards of directors of the funds, the merger can create better conditions for long-term returns and strengthen the ability of the merged fund to secure the interests and services of fund members in the future,” Gildi and Festa added.
Two pension funds were similar in many respects, they said, including in terms of fund member groups, entitlement systems and actuarial criteria.
“These similarities create favourable conditions for successful integration and increase the likelihood that the intended benefits of the merger will be passed on to fund members,” they stated.
Gildi and Festa began formal talks on a possible merger at the beginning of June.
If the merger goes through, they said, a fund would be created that was Iceland’s second-largest with approximately ISK1.6trn in assets based on the funds’ positions at year-end 2025.
This would make the joint fund only slightly smaller than the biggest Icelandic pension fund, LSR, which had ISK1.664trn at the end of 2025.
“The merged fund will also be the largest in the country, with a total of about 285,000 fund members holding rights with Gildi and about 116,000 with Festa,” they said.
Government employee pension fund LSR, by comparison, had 32,196 active members at the end of last year, and 27,044 pensioners, according to its website.
The planned merger is part of the ongoing consolidation trend in the Icelandic pension sector, which has become more eventful in the last year and a half.
In early July, newly merged Almenni-Lífsverk said its board had agreed on a merger with the SL pension fund.
But not all talks have led to formal merger proposals, with early discussions on a merger between the Pension Fund of Commerce (Lífeyrissjóður verzlunarmanna, LV) and Birta Pension Fund having ended without agreement after both funds analysed figures.
