Icelandic pension funds are currently facing uncertainty on several major issues, including over conflicting actuarial opinions – a state of affairs the institutions discussed at this week’s annual general meeting (AGM) of their industry association.
At the event held by the Icelandic Association of Pension Funds (Landssamtök lífeyrissjóða, LL) in Reykjavik on Tuesday, the lobby group’s chair, Jón Ólafur Halldórsson, spoke about the problem regarding changes pension funds had made to their statutes based on new life expectancy tables, according to an account of the AGM on LL’s website.
In the last two years, Icelandic pension funds have been implementing new mortality and longevity predictions which were published in 2021.
However, there have been different opinions among the group of actuaries behind the figures on how to handle accrued pension benefits with the new mortality tables. This has, in some cases, created uncertainty about the merit of each method, according to LL.
The association said the pension funds had been divided into two groups, each having chosen its own version of the changes to its statutes – in accordance with two different actuarial opinions, which had in both cases received confirmation from the Ministry of Finance and Economy.
At the Pension Fund of Commerce (Lífeyrissjóður verzlunarmanna, LV), Iceland’s second largest pension fund – of which Halldórsson is deputy chair, a related amendment to its statues was ruled illegal by Reykjavík District Court – and the pension fund is now awaiting a ruling from the Supreme Court, expected later this year.
Halldórsson told the meeting: “Such a state of uncertainty is extremely unfortunate, and indeed intolerable, regardless of the substantive verdict.”
The association’s chair also spoke about the ongoing dispute between the pension funds and the state regarding the Housing Finance Fund (HFF), which the government plans to liquidate, without – the pensions funds as major investors have argued – properly compensating bondholders.
There had been discussions about a possible agreement, Halldórsson told the meeting, adding that although he hoped for a successful end to the dispute for the pension funds, there was still none in sight.
“The position of pension funds is extremely strong; the state will not be able to do anything other than fulfill its obligations in full,” he said.
“The principle of Icelandic law is well-known, recognised and clear – namely that contracts must stand,” he said.
Regarding the government’s plans to review the national pension system, LL said assumptions that the first draft of a green paper on the issue would be published by 1 December 2023 had proved wrong.
But Halldórsson, who was re-elected for another year as LL’s chair at the meeting, said there were now hopes that the green paper would appear this autumn, and he said it would constitute “hopefully a good basis for a strongly-shaped future vision for our system”.
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