The Icelandic króna is not likely to depreciate much more and that is one of the reasons that Icelandic pension funds are relocating their money to Iceland, according to Hrafn Magnússon, managing director of the National Association of Pension Funds (LL).
Another reason is that the payment of pension benefits is indexed. When inflation is high—currently at 14 percent—the pension funds seek to index themselves, for examples through the purchase of bonds which are safer investments these days than foreign stock, Magnússon told Fréttabladid.
Morgunbladid reported on Friday that Icelandic pension funds were losing money, taking the Pension Fund of Commerce as an example, which has suffered a negative real interest of 8.9 percent in the first six months of this year.
However, the website of LL states that the equity of the Icelandic pension funds has increased by almost 11 percent in the past 12 months.