Merger of Gildi and Festa approved

The merger of Gildi Pension Fund and Festa Pension Fund was approved at Gildi’s extraordinary annual meeting, held at Grand Hotel Reykjavík on Thursday, 5 November. Festa’s extraordinary annual meeting had approved the merger the day before, on Wednesday, 4 November.

Iceland’s second-largest pension fund

Unless circumstances change, the two funds will therefore merge on 1 January 2027 under the name Gildi. The merger is, however, subject to approval by the Icelandic Competition Authority, and the amendments to the articles of association required by the merger must be confirmed by the Minister of Finance and Economic Affairs, following an opinion from the Financial Supervisory Authority of the Central Bank of Iceland. The merged fund will be the largest in Iceland by number of members and the second largest by assets, based on the funds’ position at year-end 2025, when their combined net assets amounted to around ISK 1,570 billion.

“We are very pleased with the outcome, as we expect the merged fund to be more robust, with a larger asset portfolio that creates better conditions for good long-term returns. Members of both funds will benefit over time, both through more efficient operations and an improved level of service. We estimate that cost synergies from the merger could amount to up to ISK 1.2 billion a year once fully realised,” says Davíð Rúdólfsson, Managing Director of Gildi.

Net assets up by ISK 38 billion

At Gildi’s extraordinary annual meeting yesterday, it was reported that the Fund’s net assets increased by ISK 38.3 billion in the first nine months of the year, amounting to ISK 1,263.5 billion at the end of September. The net nominal return of the mutual insurance division was 2.3% for the period, equivalent to a negative real return of 3.1%.

The year has been a difficult one so far on equity markets, particularly in Iceland, and the strengthening of the króna has reduced the return on the Fund’s foreign assets. Negative currency effects thus amounted to around ISK 22 billion over the period. Domestic bonds and mortgage bonds, on the other hand, delivered positive returns, as did foreign equities.

The Fund’s pension payments amounted to ISK 30.5 billion in the first nine months of the year, an increase of 8.8% on the same period last year. Old-age pension payments rose the most, by 11%. Contributions received amounted to ISK 41.7 billion, up 5.6% year on year.

New lending offer planned in the near future

The Fund’s planned new lending offer, which is expected to take effect later this year, was presented at the meeting. Interest rates on new loans will be fixed for three years and variable thereafter. Members will be able to choose between inflation-indexed and non-indexed loans. At the same time, the maximum for general loans will be raised from ISK 75 million to ISK 95 million. The Fund will also offer a new option for first-time buyers, who will be able to obtain special supplementary loans from the Fund for up to 85% of the value of the property. The Fund will provide further details on the new lending offer in the coming weeks.

About the meeting

Perla Ösp Ásgeirsdóttir, Chair of the Board of Gildi, opened the meeting. Managing Director Davíð Rúdólfsson reviewed the Fund’s operations during the year and presented the merger agreement and the organisation of the merged fund. Árni Hrafn Gunnarsson, Head of Legal, reviewed the amendments to the articles of association, and actuary Benedikt Jóhannesson presented the actuarial effects of the merger. The meeting was chaired by Guðbjörg Helga Hjartardóttir, attorney at LOGOS.

Voting at the meeting was electronic, and the meeting was also streamed.

The meeting’s presentation slides are available here on the Fund’s website, and information about the merger can be found at gildiogfesta.is.