Pension Funds in Iceland Lower Payments Skip to content

Pension Funds in Iceland Lower Payments

Most pension funds in Iceland have decided to lower their pension benefit payments due to poor yield. There is one exception, though. The Pension Fund for State Employees (LSR) delivered a 2.9 percent real yield last year and will therefore increase its payments.

Photo by Páll Stefánsson.

Almenni Pension Funds will lower its payments by 16.7 percent, the Pension Fund of Commerce by ten percent and Gildi Pension Fund by seven percent. Subsequently Gildi director Tryggvi Tryggvason stepped down yesterday, Morgunbladid reports.

Haukur Hafsteinsson, managing director of LSR, said last year’s results are satisfactory. The reason for an acceptable return in such a difficult financial environment is the combination of the fund’s portfolio of assets.

LSR’s foreign shares, which amount to approximately one third of the fund’s assets, delivered a 35.8 percent yield in 2009. Moreover, interests in the fund’s bank deposits are fairly high and the yield from state and municipality securities has been good.

What reduced LSR’s total yield in 2009 were write-offs because of company securities, Hafsteinsson explained.

Pension payments in LSR’s category A are indexed and increase monthly in correlation to the consumer price index. Most pension payments in category B change in correlation to the wage index for state employees.

Sign up for our weekly newsletter

Get news from Iceland, photos, and in-depth stories delivered to your inbox every week!

* indicates required

Subscribe to Iceland Review

In-depth stories and high-quality photography showcasing life in Iceland!

Share article

Facebook
Twitter

Recommended Posts