​Iceland’s pension funds post 6.5% real return in 2024

Pension funds in Iceland achieved returns in real terms of 6.5% in 2024, according to the country’s pensions lobby, citing an early compilation of results from its members.

The Icelandic Pension Fund Association (Landssamtök lífeyrissjóða, LL) said: “The estimate is based on the weighted average of the entire portfolio of Icelandic pension funds, but the final return figures will be published when the funds’ annual accounts for 2024 are available.”

In a statement released on Monday, LL said however that pension funds looked to long-term returns on investments, because their obligations were long-term.

“Over the past 10 years, the funds’ average real returns have been around 4.0% and five-year returns around 2.7%,” the association said.

Meanwhile, Iceland’s Almenni Pension Fund, which is due to announce its full results tomorrow, said last week that its mixed-return pension options had been its best performers in 2024, producing nominal returns between 10% and 13.8%.

Among those options, the highest return was for Life Insurance I (Ævisafn I), which gained 13.8% in 2024, corresponding to a real return of 8.7%.

Almenni said in its commentary: “It can be said that 2024 was a successful year for investors. The main markets in which Almenni Pension Fund invests produced good returns.”

Commenting on prospects for 2025, the pension fund said the outlook was somewhat mixed for the start of this year, with inflation having calmed in many countries, providing room for interest rate cuts – but with uncertainty about policy changes coming from the new US regime, and their impact on the global economy.

In Iceland, the pension fund said there was uncertainty about the impact that earthquakes experienced in many parts of the country would have on the economy, although it said that, on the other hand, the domestic economy was very strong with the long-term outlook for it good.

“The new government is announcing resource taxes on the fishing industry and tourism industry, which is causing uncertainty for the largest export sectors and may reduce investment,” Almenni said.

Usually, strong earthquake activity was recorded earlier in January near the Bárðarbunga composite volcano under Vatnajökull, Iceland’s biggest glacier, to the east of the island, raising fears of a large eruption to come.

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