Icelandic pension funds achieved average nominal returns of 8.5 per cent in 2023, according to estimates from the National Association of Pension Funds.

However, as inflation for the year was around 8 per cent, the real return of Icelandic pension funds was 0.5 per cent on average.

These estimates take into account the weighted average of the entire portfolio of Icelandic pension funds in 2023, but the final return figures will be published when pension funds’ annual accounts for 2023 are made available.

The National Association of Pension Funds said last year’s investment landscape was characterised by fluctuations, both in domestic and foreign financial markets, alongside high domestic inflation.

Over the past 10 years, the average real return of Icelandic pension funds has been around 4.1 per cent, while the average return over the previous five years was approximately 3.8 per cent.

This exceeds the 3.5 per cent return standard under pension funds’ obligations.

"Pension funds look for long-term returns on investments, as their obligations are long-term,” the National Association of Pensions Funds said.

“Success in long-term returns is therefore essential.”

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