## Iceland: Financial Sector Assessment Program-Technical Note on Pension Fund Regulation and Supervision

_IMF Staff Country Reports, July 28, 2023_

## Source details

**Canonical URL:** [Iceland: Financial Sector Assessment Program-Technical Note on Pension Fund Regulation and Supervision](https://www.imf.org/en/publications/cr/issues/2023/07/26/iceland-financial-sector-assessment-program-technical-note-on-pension-fund-regulation-and-537046)

## Other formats

- [Markdown version](/en/publications/cr/issues/2023/07/26/iceland-financial-sector-assessment-program-technical-note-on-pension-fund-regulation-and-537046/index.md)
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## Bibliographic details
- Published: July 28, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400252150.002

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### Overview and scope
- Analyzes key aspects of the regulatory and supervisory regime for pension funds in Iceland.
- Reviews recent developments and the structure of the Icelandic pension fund sector as part of a Financial Sector Assessment Program (FSAP).
- Focuses in particular on the compulsory occupational scheme in Pillar II, identified as the most important pillar of the system.
- Notes that a separate technical note summarizes the results of the risk analysis carried out for the pension fund sector and elaborates on current market risk sensitivities.

### Role and systemic importance of pension funds
- Pension funds in Iceland act as investors and lenders and play a vital role in the domestic financial sector.
- The pension fund sector is described as large, well developed, and highly interconnected with the domestic financial system.
- Main interconnections: exposures toward banks and domestic investment funds.

### Regulatory and supervisory assessment — key findings
- The governance and internal controls framework for pension funds is not aligned with the systemic role of the sector.
- Underlying rules in the Pension Fund Act pre-date corresponding provisions for other financial sectors.
- The Financial Supervisory Authority has adopted a risk-based and forward-looking supervisory model.
- There is no minimum frequency set for on-site inspections.

### Policy recommendations (FSAP)
- Strengthen the legislative framework, with emphasis on:
  - Governance
  - Internal controls
  - Outsourcing

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## Content in this bundle

- **1islea2023009**
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  - [1islea2023009 (PDF)](/-/media/files/publications/cr/2023/english/1islea2023009.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2023/07/26/iceland-financial-sector-assessment-program-technical-note-on-pension-fund-regulation-and-537046_