Two of Iceland’s largest pension funds – the Pension Fund of Commerce (Lífeyrissjóður verzlunarmanna, LV) and Gildi Pension Fund – reported returns for 2025 that are above the industry average, while the smaller pension fund Stapi posted a below-average gain.
But with inflation eroding the nominal investment returns generated by the institutions, all suffered from deteriorating actuarial positions over the course of the year, according to annual reports released recently.
Gildi Pension Fund, the country’s third-largest in terms of assets under management, last week reported a real return from its mutual insurance division of 3.3%, which was 7.1% in nominal terms.
This is higher than the 2.6% average real return figure for 2025 for Icelandic pension funds overall reported by the Icelandic Pension Funds Association (Landssamtök lífeyrissjóða, LL) last month.
LV – the second-biggest Icelandic pension fund – reported a 3.2% return for 2025, and a nominal gain of 7.0%, in figures released at the end of February, saying 2025 had been a good year for the pension fund.
Its assets increased by ISK108bn (€750m) to amount to ISK1.57trn at the end of 2025, LV said.
Stapi Pension Fund, meanwhile, which is located in the northern town of Akureyri, reported last week that the nominal return on its assets was 5.6% in 2025, and the fund’s real return was 1.8%.
Total assets grew to ISK462.2bn in 2025 from ISK430.9bn the year before, according to Stapi’s annual report.
Commenting on its results, Gildi stated: “The year 2025 was somewhat volatile in asset markets and was significantly influenced by political developments abroad.”
“The strengthening of the Icelandic króna against the US dollar negatively affected returns on foreign assets, although most delivered good performance in local currency,” it said, adding that the best returns had come from domestic and foreign bonds, closely followed by the fund’s listed domestic equity portfolio.
For its part, LV said its domestic equities had made significantly better returns than the benchmark index, and the return on foreign equity holdings in Icelandic króna had been “also excellent”, although there had been considerable fluctuations in the markets within the year.
“The fund’s foreign equity and bond portfolios delivered good returns in their respective currencies, but the depreciation of the US dollar against the Icelandic króna led to lower returns in Icelandic króna,” LV noted.
LV said its actuarial position was -5.4% at the end of 2025, compared with -4.3% the previous year.
“The return on asset portfolios had a positive impact on the actuarial position, while inflation had a negative impact as the acquired rights of fund members are indexed,” the pension fund said, adding that the reassessment of disability and rehabilitation probabilities also had a slight impact on the reduction of the actuarial position.
“Despite the negative actuarial position, it does not affect the pension paid and is well within the limits set by law,” LV continued.
Gildi said its total net assets amounted to ISK1.22trn at the end of 2025, up by ISK98.5bn year-on-year.
But it noted: “The actuarial position of the fund, which reflects the division’s ability to meet its obligations, was -1.8% at year-end 2025 compared to -1.2% the previous year.”
Stapi reported a negative actuarial result for 2025 of ISK303m, but said the fund’s actuarial position at the end of the year was positive at 4.1%.
“The negative actuarial result can be largely attributed to the return on the fund’s assets during the year, which was slightly lower than the fund’s 3.5% real return target,” it said, adding that on top of this, the actuarial revaluation of the fund’s bond holdings decreased by ISK2.69bn from the year before, also weighing on the actuarial result.
