Members of Iceland's Farmers' Pension Fund (LSB) have unanimously approved a proposal to merge the fund with Frjálsi Pension Fund, paving the way for a combined pension fund with assets of around ISK 672bn.

The decision was taken at the LSB annual meeting on 19 June, following the signing of a merger agreement by the boards of the two Icelandic pension funds earlier this month.

The merger remains subject to approval from the Competition Authority and confirmation by the Ministry of Finance and Economic Affairs of amendments to the funds' articles of association.

Merger discussions between the two funds began in Autumn 2025, followed by a period of due diligence and feasibility assessments.

The boards of both funds concluded that a merger would strengthen their operating foundations and benefit members.

Under the agreement, Frjálsi Pension Fund will assume all rights and obligations relating to LSB members, who will become members of Frjálsi.

However, the assets and accrued rights of LSB members will initially continue to be managed through a separate insurance division within Frjálsi.

The pension funds said the merger is intended to deliver economies of scale, reduce operating costs, improve service provision and information for members and employers, reduce operational risks, and strengthen asset and risk management capabilities.

Based on figures as at 30 April 2026, the merged fund will have combined assets of approximately ISK 672bn, comprising ISK 626bn from Frjálsi and ISK 46bn from LSB.

The enlarged fund will serve more than 85,000 members.

Commenting when the merger agreement was announced, Frjálsi Pension Fund chair, Ásdís Eva, said: “With the merger, the fund members of the Farmers' Pension Fund will become part of Frjálsi's strong fund member group, and the merged fund will serve over 85,000 fund members.

“We will continue to place great emphasis on good and personal service. The merger lays a solid foundation for a strong future with the interests of all fund members as our guiding principle."

LSB board chair, Vala Valtýsdóttir, previously described the merger as being in the best interests of the Farmers' Pension Fund and said the board believed it would provide a strong foundation for the fund's future development.

The funds confirmed that members do not currently need to take any action regarding the merger and will continue to receive updates as the remaining regulatory approvals are secured.

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