The road to solvency: How the Icelandic pension funds achieved actuarial balance in the 1990s

Ólafur Ísleifsson


This paper presents the results of a study on how the Icelandic private market pension funds achieved actuarial balance after sustaining a relatively long period of being less than solvent. The study, being largely based on unpublished data, focuses on the pension funds’ actuarial balances given that their investment performance is confined to a limited selection of asset classes available to them in the first decades of their operations. It is shown that apart from the introduction of price indexation of important classes of fixed income instruments, several measures undertaken by the funds contributed to make them able to meet their obligations.


Actuarial pension deficit; pension rights; pension asset classes; discount rate; price indexation.


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H55; J3



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Útgefandi er viðskiptafræðideild og hagfræðideild Háskóla Íslands, viðskiptafræðideild Háskólans í Reykjavík og Seðlabanki Íslands.

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