Nearly ISK 100 billion increase in LSR’s assets in 2025
16. April 2026
The net assets of the Pension Fund for State Employees were just under ISK 1,664 billion at year-end 2025, an increase of just over ISK 97 billion year-on-year. LSR’s nominal return, as the country’s largest pension fund by assets, was 6.6% in 2025 and the net real return was 2.7%. The fund’s real return has averaged 3.8% over the past 10 years.
LSR: Net assets for pension payments
Last year, the fund’s net investment income amounted to just under ISK 104 billion, marking the sixth time in the past 10 years that annual investment income has exceeded ISK 100 billion. Over this 10-year period, LSR’s net assets have increased by ISK 1,081 billion, of which investment income accounted for around ISK 922 billion, or about 85% of the increase.
During the year, LSR paid nearly ISK 118 billion in pensions to an average of more than 27,000 fund members, and the number of pension recipients increased by just over 1,100. On average, close to 32,200 fund members paid contributions to the fund, an increase of approximately 200 year-on-year.
LSR Pension Payments
These are among the findings of LSR’s 2025 annual financial statements, which were approved by the fund’s board at its meeting on 15 April. They also show that the net real return of Division A, the fund’s main division, was 2.4%, and its actuarial position was positive by 0.8% at year-end. The net real return of Division B was 4.7%, while for Private Pension the net real return was 2.5% for Plan I, 3.4% for Plan II, 1.7% for Plan III and 2.3% for Specified Private Pension.
The share of securities holdings denominated in foreign currencies has increased in recent years and stood at just under 48% at year-end. The strengthening of the Icelandic króna against the US dollar significantly reduced what was otherwise a strong return on foreign securities in ISK terms during the year. Returns on domestic securities, both equities and bonds, were also solid and exceeded the benchmarks the fund uses for its investments.
LSR's Asset Portfolio 2025
The fund’s asset portfolio at year-end was composed as follows: ISK 663 billion in bonds, ISK 945 billion in equities and mutual fund units, and ISK 56 billion in deposits.
More on LSR divisions in 2025
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The nominal return was 6.3% in 2025, corresponding to a 2.4% net real return. The average net real return over the past five years is 1.4% and the average over the past 10 years is 3.9%. Total assets of Division A amounted to ISK 1,412.9 billion at the end of 2025.
At year-end 2025, the division’s securities portfolio was allocated as follows: 40.5% of Division A’s assets were in bonds, 15.5% in domestic equities and funds, 42.6% in foreign equities and funds, and 1.3% in deposits. Assets in foreign currencies stood at 48.8% at year-end.
In 2025, an average of 15,442 fund members or their spouses received pension payments from Division A, totalling ISK 31.264 billion. On average, 31,408 fund members paid contributions to the division, and total contributions during the year amounted to ISK 52.362 billion.
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The nominal return was 8.9% in 2025, corresponding to a 4.7% net real return. The average net real return over the past five years is 1.2% and the average over the past 10 years is 4.0%. Total assets of Division B amounted to ISK 217 billion at the end of 2025.
At year-end 2025, the division’s securities portfolio was allocated as follows: 38.4% of Division B’s assets were in bonds, 15.7% in domestic equities and funds, 36.5% in foreign equities and funds, and 9.4% in deposits. Assets in foreign currencies stood at 43.2% at year-end.
In 2025, an average of 19,313 fund members or their spouses received pension payments from Division B, totalling ISK 85 billion. On average, 521 fund members paid contributions to the division during the year, and total contributions amounted to ISK 0.7 billion.
The accrued liabilities of Division B at year-end 2025 amounted to ISK 1,236 billion and increased by 5.5% during the year. According to the actuarial valuation, the Treasury and other employers are to cover ISK 708 billion of Division B’s liabilities through the payment of pension increases. The liabilities that the division itself must cover therefore amount to ISK 528 billion. According to the actuarial valuation, the fund’s revalued net assets stood at ISK 217 billion at year-end. For the ISK 311 billion still needed to fully fund the division’s liabilities, the fund has a claim on the Treasury under the state guarantee.
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The nominal return of Plan I was 6.4%, corresponding to a 2.5% net real return. The nominal return of Plan II was 7.4%, corresponding to a 3.4% net real return. The nominal return of Plan III, which is a restricted deposit account, was 5.6% last year, corresponding to a 1.7% net real return. The nominal return of Specified Private Pension was 6.2%, corresponding to a 2.3% net real return. Total assets of Private Pension amounted to ISK 33.5 billion at year-end 2025. The Private Pension investment plans have different asset allocations, and their returns therefore fluctuate to different degrees.
At year-end 2025, the securities portfolio of Plan I was allocated as follows: 31.7% in bonds, 13.5% in domestic equities and funds, 52.9% in foreign equities and funds, and 1.9% in deposits. Assets in foreign currencies stood at 53.9% at year-end.
At year-end 2025, the securities portfolio of Plan II was allocated as follows: 59.3% in bonds, 7.0% in domestic equities and funds, 28.6% in foreign equities and funds, and 5.1% in deposits. Assets in foreign currencies stood at 30.1% at year-end.
At year-end 2025, the securities portfolio of Specified Private Pension was allocated as follows: 48.5% in bonds, 8.1% in domestic equities and funds, 32.7% in foreign equities and funds, and 10.7% in deposits. Assets in foreign currencies stood at 39.9% at year-end.
In 2025, an average of 414 fund members or their spouses received pension payments from Private Pension totalling ISK 1,306 million. Contributions amounted to just over ISK 1,775 million in 2025, and on average 3,501 fund members paid contributions to the division during the year.