The United Pension Fund

The year 2006 marks the 15th anniversary of the United Pension Fund. The 4th of March 1992 saw the agreement of a merger between the Construction Workers Pension Fund and the Metalworkers and Shipwrights Pension Fund.

The United Pension Fund opened its doors on the first of June of that year and since then, six other pension funds have joined; The Graphical Pension Fund, the Pension Fund of Industrial Workers in Hafnarfjörður, the Pension Fund of the Horticultural Trade, the Masons´ Pension Fundand the Foremens´ Pension Fund. The latest to join was Hlif Pension Fund, whose merger into the United Pension Fund was finalized in April 2002.

The United Pension Fund is one of the largest pension funds in Iceland. It´s assets have multiplied in the last 15 years, from ISK 9 billion in 1992 to 88,4 billion in 2006. Empowered by its size, the fund minimizes the portfolio risk by asset allocation. This is relevant to the United Pension Funds investments as well as the insurance of its members.

Executive Officers
Chief Executive Officer
Kristján Örn Sigurðsson
kristjan[hjá]lifeyrir[punktur]is

Investment manager
Sigríður Hrund Guðmundsdóttir
sirry[hjá]lifeyrir[punktur]is

Manager of Operations
Ólafur Haukur Jónsson
olafur[hjá]lifeyrir[punktur]is

Aims
The United Pension Fund aims to secure the future of its members and that of their partners and children. The fund remits old age and disability pensions to members of the fund, as well as widow pensions and child pensions to partners and children of deceased fund members.

The United Pension Fund consists of three divisions; The Equal Pensions Division, which offers constancy to fund members and their families in the face of unexpected traumas as well as sickness and old age; The Age Related Division, which maximizes the cumulative worth of members deposits over time and furthermore the Private Assets Division, which offers the option of voluntary additional pension savings. The United Pension Fund builds on the security accomplished by mutual pension savings as well as the individual´s optional private savings for an even brighter future.

The fund has been a leading power in the development of new ideas and the evolvement of modern pension savings since its foundation in 1992. The United Pension Fund was the first Icelandic pension fund to offer voluntary personal savings and a one off family payment at the death of a young fund member. Furthermore, the fund also took groundbreaking steps by raising child pension payments to a great extent.

Balance Sheet and Stockholdings
Net assets of the fund towards the payment of pensions at the end of year 2006 were ISK 88.373 million, compared with ISK 71.792 million at the end of year 2005. The increase was 22,9% in 2006.

The pension disbursements of the Fund''s primary divisions during the year 2006 amounted to a total of ISK 2.037 million. Old-age pensions amounted to ISK 1.329 million, disability pensions to ISK 384 million, pension payments to surviving spouses were ISK 289 million, to surviving children ISK 32 million and family benefits amounted ISK 3 million. A total of ISK 67 million was paid out of the Private Assets Divison. The number of old-age pensionists at the end of the year was 2.509, disability pensionists 699, surviving-spouse pensionists 1060. A total of 249 children received pension payments.

During the year 2006 a total of 11.787 Fund members paid contributions to the Fund''s primary divisions. A litle less than 3 thousand beneficiaries paid into the Fund''s Private Assets Division. Premiums paid into the Fund''s primary divisions amounted to ISK 3.999 million. Premiums paid to the Private Assets Division totalled ISK 393 million.

Investments
The Pension Fund invested in securities for the amount of ISK 28.915 million during the year 2006. The nominal value yield during the period was 19,6% and the real yield 11,8%.

The investment stategy of Sameinaði is to invest in global markets through Mutual Funds:

Domestic Equity	18%
Global Equity	30%
Global Bonds	2%
Bonds - Government	21%
Bonds - Financial Corporations	7%
Bonds - Property Collateral	11%
Registered Bonds - issued by Corporations	9%
Alternative Investments	2%
Total	100%

Major holdings in Mutual Funds pr. 31.12. 2006 - ISK millions

Alliance Bernstein	3.430
Capital International	1.757
Franklin Templeton	2.551
Gartmore	1.674
Janus	3.219
Schroder	4.844
State Street	1.665
Vanguard Group	3.198
Wellington	1.260
Other Fund Managers	1.727
Total Open-Ended Funds in foreign currency	25.325

Fund Investment Policy in 2007:

National and international investments:
Assets in ISK, netto	55 - 80%
Assets in foreign currency, netto	20 - 45%
Allocation of investments:
Bank deposits	0 - 6 %
Bonds	50 - 75%
National thereof	40 - 70%
International thereof	0 - 10%
Stocks	25 - 50%
National thereof	5 - 25%
International thereof	20 - 45%
Allocation of bonds
Government bond	15 - 40%
Municipality bonds	0 - 10%
Bonds issued by financial corporations	3 - 20%
Bonds with property collateral	5 - 25%
Registered market bonds issued by corporations	0 - 12%
The investment policy shall be carried out in accordance with valid acts and articles of the fund at the time in question.
All proportions represented above are proportions of net assets of the United Pension Fund.

An actuarial appraisal
An actuarial appraisal at the end of December 2006 shows that the accrued commitments of the Fund''s Option Division (Stigadeild) amount to ISK 73.257 million. The Option Division''s assets for actuarial appraisal are ISK 79.859 million, it''s commitments in excess of assets thus being ISK 6.602 million or 9%. The assets for actuarial appraisal of the Fund''s Age-related Divison are ISK 6.878 million, it''s total commitments accrued amounting to ISK 5.754 million, bringing the Division''s assets in excess of total commitments accrued to ISK 1.124 million or 19,5%.

Principles for Responsible Investment

In spring 2007 the board of Sameinaði lífeyrissjóðurinn decided to become signatore to the Principles for Responsible Investment as initiative of UNEP Finance and the UN Global Compact. That includes among others that the fund will ask its business partners/investing companies for answer to few basic questions regarding these rules and use as a part of its investing decisions.  See further information at www.unpri.org. 

Location

Sameinaði lífeyrissjóðurinn
(The United Pension Fund)
Borgartuni 30
105 Reykjavik
Iceland

Tel: 354 510 5000
Fax: 354 510 5010