Lífeyrissjóður

Lífeyrissjóður is the Icelandic term for a pension fund. These funds play a crucial role in the Icelandic retirement system, providing individuals with a supplementary income after they cease working. The Icelandic pension system is largely based on mandatory contributions from both employees and employers. These contributions are then managed by these pension funds, which invest the money to generate returns over the long term.

The primary purpose of a lífeyrissjóður is to ensure financial security for individuals in their old age. Contributions are typically made throughout an individual's working life, and the accumulated sum, along with investment gains, forms the basis of their future pension payments. There are various types of pension funds in Iceland, often affiliated with specific professional groups or industries, though a significant portion of the population is covered by general occupational pension funds.

The management of these funds is subject to strict regulations to protect members' assets and ensure responsible investment practices. The Icelandic Financial Supervisory Authority (FME) oversees the operations of pension funds. Investments are diversified across various asset classes, including domestic and international stocks, bonds, real estate, and infrastructure. The goal is to achieve sustainable growth while managing risk effectively. Upon retirement, individuals can typically choose to receive their pension as a lump sum, a regular annuity, or a combination of both, depending on the specific fund's rules and the member's preferences.