Twenty Icelandic pension funds, including the General Pension Fund, have voiced their opposition to government plans to liquidate and settle the ÍL Fund.

In response to a Ministry of Finance and the Economy consultation, the pension funds said that the plans were based on an “insufficient” analysis of legal and financial aspects.

Furthermore, they stated that the proposals included an attempt to “circumvent” the state’s financial obligations.

The ÍL Fund was established in 2019 with the aim of minimising the Treasury's risk in relation to the processing and settlement of the accumulated financial problems of its predecessor, the Housing Loan Fund.

It was then brought under the supervision of the Ministry of Finance and the Economy, while the Housing Loan Fund had been under the supervision of the Ministry of Social Affairs.

The Minister of Finance and the Economy submitted a report on the state of the ÍL Fund, which concluded that the ÍL Fund would not be able to meet of its obligations and had therefore become insolvent.

Following the report, the consultation detailed plans to submit a bill on the liquidation of the ÍL Fund and the settlement of the government liability for the fund.

In their response, the pension funds said that the proposed legislation would involve expropriation, which would be contrary to the constitution, and that the government would be liable for damages.

Furthermore, the pension funds stated that the plans risked tarnishing the reputation of the Icelandic state and credibility on the financial markets.

“They could destabilise financial markets with unforeseen consequences for asset prices and investor interests,” the pension funds said.

“The minister's plans are therefore poorly thought out and can cost the state considerable sums of money in addition to protracted lawsuits both domestically and abroad.”

Share Story: