Iceland’s second-largest pension fund, the Pension Fund of Commerce (Lífeyrissjóður verzlunarmanna, LV), has welcomed a ruling from the country’s top court confirming that the basis it used for making a huge increase in liabilities was right.

The ISK1.29trn (€8.85bn) pension fund said: “The Supreme Court has confirmed the legality of the amendments made to the Articles of Association of the Pension Fund of Commerce in 2022 to accommodate the increasing life expectancy of fund members.”

The court had thereby rejected a claim to annul amendments to certain provisions of the Articles of Association, which had been challenged, the pension fund said in a statement on Wednesday.

LV and other pension funds in Iceland have been in a state of uncertainty for some time regarding the changes they made, which increased liabilities.

The background is the differences of opinion among actuaries in Iceland that have existed on how to implement new mortality and longevity predictions published back in 2021.

LV said those new life expectancy tables, which were approved by the Minister of Finance and Economic Affairs in December 2021, reflected the trend that people in Iceland, including its scheme members, were living longer – although to varying degrees depending on age.

It said the changes to the calculation assumptions for pension liabilities had had a significant impact.

“They increased the fund’s pension liabilities by ISK77bn, and are therefore considered to be one of the largest changes to the assumptions for the operation of pension funds since the enactment of the Pension Fund Act in 1997,” LV said.

Almenni Pension Fund, meanwhile, said the ruling in LV’s favour was “a precedent-setting decision for other pension funds”, with the Supreme Court having confirmed that age-based adjustment of rights due to new life expectancy tables was permitted.

“The decision is fully consistent with the changes to the rights approved at the Annual General Meeting of Almenni Pension Fund on 31 March 2022,” the pension fund said.

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Rachel is IPE's Nordic correspondent. She has long been a freelance writer, and over the years, has written for The Telegraph, The Independent, The Observer, AMWatch and elsewhere. In 2001, Rachel's personal finance book Kickstart Your Money was published by John Wiley & Sons.View full Profile

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