1855

The foundation for the pension rights of civil servants was laid by the decree of King Fredrik VII of Denmark from 31 May, 1855, to enact in Iceland the Act on the Pension of Civil Servants from 5 January, 1851. With the law, every civil servant was guaranteed the right to a pension "when he is released from office due to age or ill health, or due to other reasons beyond his control". No provision was made for the accumulation of pension rights, but "the pensions will be paid from the treasury", as stated in Article 2 of the law.

That same year, on 5 January, 1851, with the king's open letter from 31 May, the law on the duty of civil servants to provide for their widows with financial support after their death, was enacted in Iceland, with some amendments.

1880

On 27 February, 1880, the Act on the Pension of Priests no. 4/1880 was enacted.

1884

The Act on the Pensions of Priests’ Widows no. 13/1884 was enacted in 1884. Amendments were later made to the law with Act no. 36/1895.

1904

A new general law on pensions was established by Act no. 4/1904. Just like the previous Act on Pensions from 1851, it provided for pensions for those who had received a royal appointment for office and received a salary from the national treasury. The rights of those who were in office when the law was enacted still depended on the older law.

At the same time, a law was passed on the obligation of civil servants to collect an old-age allowance or buy a stored pension no. 5/1904. According to Article 2 of the Act, a public servant should annually spend 2% of their salary to collect an old-age allowance. If the public servant chose to buy a stored pension, all of which would be lost if the buyer of the pension died before it was taken, they would have to annually spend 11⁄3% of their salary for it.

1905

Act no. 28/1905 on an addendum to the open letter of 31 May, 1855 on the duty of civil servants to provide for their widows with financial support after their death. With the law, civil servants were enabled to fulfill their obligation in this regard by purchasing life insurance from the government's life insurance agency. The insurance was supposed to be at least 15 times higher than the maintenance amount that the civil servant was obliged to provide for his widow.

1907

Act no. 48/1907 on the Pension of Priests and Act no. 49/1907 on the Duty of Priests to Buy Pensions for Their Widows were enacted. At the same time, the old Act no. 4/1880 on the Pension of Priests and no. 13/1884 on the Pension of Priests’ Widows were repealed.

1919

The first real pension fund was created on 28 November, 1919, with the entry into force of Act no. 72/1919 on the Establishment of a Pension Fund for Civil Servants and on Their Duty to Purchase a Stored Pension. The fund was intended to ensure that civil servants who resigned due to old age and ill health, had a stored pension, cf. Article 1 of the Act. For the purchase of a pension according to law, civil servants were required to spend 5% of their annual salary, up to ISK 5,000, and the Treasury provided the fund with initial capital in the amount of ISK 50,000. Therefore, it can be said that the State Employees' Pension Fund has its roots in this legislation, although the fund's name and activities certainly changed later. When the law came into force, Acts no. 4/1904 on Pension, no. 5/1904 on the Duty of Civil Servants to Collect Old-Age Allowance or Buy a Stored Pension and no. 48/1907 on the Pension of Priests were repealed.

1921

Although the law on the pension fund for civil servants and their widow's insurance had recently been enacted, a new one was enacted in 1921, Act no. 51/1921 on the Pension Fund of Civil Servants and Their Widows. With this Act, the rules of Act no. 72/1919 and 73/1919 merged into one comprehensive law.

Comments to the bill that became Act no. 51/1921 state that they are submitted at the request of the state employees' union. The reason for this must have been dissatisfaction with the rules from 1919. They included mutual insurance of civil servants' pension rights, but the widow's insurance was arranged in such a way that the burden rested on each civil servant individually, depending on his circumstances, and was therefore carried different weight. With Act no. 51/1921, the widow's insurance was included under the common pension fund of civil servants and their widows. At the same time, the premium was increased from 5% to 7% of the annual salary.

That same year, Act no. 33/1921 on the Pension Fund of Children's Teachers and Their Widows was enacted.

1928

Act no. 15/1928 on the Pension of Permanent Employees of Búnaðarfjelag Íslands. With the law, it was decided that Act no. 51/1921 on the Pension Fund of Civil Servants and Their Widows should also apply to permanent employees of Búnaðarfélag Íslands.

1938

The Midwives' Pension Fund was established with Act no. 86/1938.

1944

With Act no. 101/1943, the name of the fund was changed to the State Employees' Pension Fund, according to Article 1 of the Act. The Act entered into force in 1944. According to Article 3 of Act no. 101/1943, fund members were now, in addition to the civil servants who had access to the fund according to the old law, all other employees who received a salary from the treasury and were hired for one year or more, if their work in the service of the government was their main job. Government employees who were entitled to pensions from other funds, such as children's teachers and nurses, were not obliged to become fund members.

At the same time, a new comprehensive law was passed on the Pension Fund of Children's Teachers and their Widows no. 102/1943 and the Nursing Women's Pension Fund established by Act no. 103/1943.

1955

In 1955, the Act on the State Employees' Pension Fund no. 101/1943 was reissued as Act no. 64/1955. At the same time, the Act on the Nurses’ Pension Fund was reissued as Act no. 65/1955 and the Act on the Pension Fund of Children's Teachers and Their Widows as Act no. 66/1955.

No fundamental amendments were made to the Act on the State Employees' Pension Fund, but the purpose of the reissue must have been to incorporate various minor amendments that had been made to it.

1963

A new comprehensive law on the State Employees' Pension Fund no. 29/1963 and Children's Teachers' Pension Fund no. 85/1963 were enacted.
One of the main reasons for revising the law was the need to review the fund's relationship with social security. Furthermore, the old law's rule of basing old-age, disability and spousal pensions on the average of the last 10 years was repealed and replaced by the last salary of fund members. The reason for this was that high inflation and the rapid rise in the ISK amount of wages greatly skewed the average wages of the last 10 years downwards for pensioners.

1965

A new comprehensive law was passed on the Nurses’ Pension Fund no. 16/1965. Furthermore, the Act on the Pension of Members of Parliament no. 46/1965 and Ministerial Pension Act no. 47/1965 were established. The Act stipulated that members of parliament should pay a premium to a special parliamentary department of the State Employees' Pension Fund and ministers to a special ministerial department. Previously, there had been provisions on the pensions of members of parliament in the Act on the Parliamentarian's Salary for members of the parliament and the pensions of ministers in the Act on Salaries of State Employees.

1969

The Act on the Pension of the President of Iceland no. 26/1969 was established.

1980

With Act no. 93/1980, the Children's Teachers' Pension Fund was merged with the State Employees' Pension Fund.

1990

In 1990, a large-scale legislative purge took place. With Act no. 118/1990, various laws were repealed, including laws regarding civil servants and their pensions. Amongst laws repealed, according to Article 3 of the Act, were:

A decree implementing in Iceland the law of 5 January, 1851, on pension, 31 May, 1855.
An open letter, implementing in Iceland, with some amendments, the Act of 5 January, 1851, on the Duty of Civil Servants to Provide for Their Widows With Financial Support After Their Death, 31 May 1855.
Pension Act, no. 4/1904.
Act on the Duty of Civil Servants to Collect an Old-Age Allowance or Buy a Stored Pension, no. 5/1904.
Act on the addendum to the open letter of 31 May 1855, on the Duty of Civil Servants to Provide for their Widows With Financial Support After Their Death, no. 28/1905.
The above-mentioned Act was therefore officially in force until 1990, but the comments to the bill, which became Act no. 118/1990 state regarding Article 3 that it is "proposed to consult with the Ministry of Finance that various older legal provisions on the pensions of public employees or their individual categories will be removed from the law, as they no longer play any role".

1992

The Act on Midwives' Pension Fund was repealed by Act no. 18/1992.

1997

The Act on the State Employees' Pension Fund was reissued with the current Act no. 1/1997 and at the same time the Act on the Nurses' Pension Fund was reissued with Act no. 2/1997, cf. Act on Pension Rights of State Employees no. 141/1996.

The Act made significant changes to the State Employees' Pension Fund. The fund was divided into two financially independent divisions: Division A and Division B. Those who were already members of the fund when the law came into force paid into Division B and basically kept their rights unchanged. New fund members and those who chose to move from an older system to a new one paid into Division A, where a new rights system was established. According to the older system, the pension rights of fund members depended on how long they had paid contributions to the fund, what employment rate they were in at any given time and the job they held at the time of retirement. In the new system, which was established with Division A, pension rights were calculated according to a points system, where the accrual of rights each year depended on the premium amount at any given time. Along with this, it was assumed that fund members in Division A would pay a premium from all their salaries throughout their working life, and the old rules on cancelling the payment of premiums at certain time limits were abolished in the division. At the same time, significant changes were made to the calculation rules for old-age, disability and spousal pensions at Division A based on the fund's previous laws.

1999

LSR's Private Pension Division began operations on 1 January, 1999. The Private Pension Division accepts voluntary additional pension savings for returns.

2003

Act no. 141/2003 on the Pension of the President of Iceland, Ministers, Members of Parliament, and Judges of the Supreme Court was enacted, and at the same time the old laws and provisions on the pension of these groups were repealed.

2009

The Act on the Pension of the President of Iceland, Ministers, Members of Parliament and Supreme Court Judges was repealed by Act No. 12/2009. At the same time, these groups were included under the general provisions of the Act on the State Employees' Pension Fund and it was assumed that they would pay into Division A of the fund.

2017

On 1 June, 2017, Act no. 127/2016 on the Amendment of the Act on the State Employees' Pension Fund no. 1/1997 was enacted, where significant amendments were made to Division A of the fund. After the amendments, the division operates on the basis of the General Pension Fund Act, Act no. 129/1997 on the Mandatory Insurance of Pension Rights and the Operation of Pension Funds, and not on the basis of special rules in Act no. 1/1997 on the State Employees' Pension Fund. The aim of the amendments was to harmonise the pension rights of civil servants and workers in the general labour market. The comments to the bill that became Act no. 127/2016 state that for a long time the aim has been to create a single labour market in Iceland with uniform conditions and that this is part of that process. The amendment in question did not extend to Division B of the fund, which continues to operate on the same basis as before.

2018

On 1 January, 2018, the Act on Nurses' Pension Fund No. 2/1997 expired, and the fund merged with Division B of the State Employees' Pension Fund with Act no. 35/2017. As of the same time, the rights and obligations of fund members and the employer are governed by the Act on the State Employees' Pension Fund no. 1/1997.

2019

LSR celebrated the fund's 100th anniversary, and on that occasion a breakfast meeting was held where Prime Minister Katrín Jakobsdóttir gave a speech and emphasised the social responsibility of Icelandic pension funds.

2023

In 2021, the Ministry of Finance and the Economy published new life expectancy tables for Icelanders, where it was stated that Icelanders will live considerably longer than previously expected and younger generations will enjoy more retirement years than older generations. Following that, LSR made changes to the monthly rights of fund members in Division A in proportion to the estimated life expectancy increase.

This year, LSR also started offering specified private pension, which enables fund members to have up to 3.5% of the mandatory pension premium go to a private pension fund, but reduce the contribution to the mutual insurance fund by that amount.