Iceland’s largest pension fund, Gildi, suffered a net real return of -1.2 per cent in the first nine months of the year, it has revealed.

Its results were discussed in a meeting last week with members, where it was also revealed that the nominal return for the period was 2.3 per cent. Despite the poor results, the pension fund said that since the end of September, the situation has “changed considerably” due to “major changes in the markets”.

As of 10 November, Gildi’s nominal return stood at 5.4 per cent.

The fund's net assets at the end of September amounted to ISK 1,126.7bn, an increase of ISK 38.1bn since the start of the year. Its estimated actuarial position stood at -3.5 per cent at the end of September.

During the first nine months of the year, the fund’s pension payments to fund members amounted to ISK 27.4bn, an increase of almost 9 per cent on the same period last year.

Compared with other funds, Gildi said its long-term returns have been among the best among domestic pension funds.

The pension fund noted that the first 10 months of the year were difficult for the domestic stock market after a considerable increase in the second half of 2024. Indeed, the overall market index fell by 9.5 per cent during the period.

“In this context, reference was made to the impact of Donald Trump’s tariff threats, changes to the domestic tax environment, and then a series of negative news in recent weeks, such as the bankruptcy of Play, uncertainty surrounding the interest-rate judgment, and finally the malfunction at Norðurál in Grundartangi.

Added to this is persistent domestic inflation. It was reported that Gildi’s performance in domestic equities has nonetheless been much stronger than the overall market so far this year,” Gildi stated.

“Domestic bonds, however, have delivered good returns this year, and developments in foreign markets have been very favourable. A considerable strengthening of the króna against the US dollar has, however, reduced the otherwise strong returns on the fund’s foreign assets.”

In addition, the meeting addressed the consequences of the government’s decision to cease paying disability equalisation contributions to the pension system. This issue is particularly sensitive for Gildi’s members, as the fund pays disability pensions that are proportionally higher than those of most other funds in the country.

“In recent years, the government has compensated for this through a special disability contribution to those funds with the highest disability ratios, but now intends to discontinue this support. Gildi has criticised these plans, and meeting attendees supported this view, while also emphasising the need to find a comprehensive and permanent solution to this issue for the future,” the fund stated.

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