Was on the phone in the radio show "At Dawn" this morning at Bylgjan radio back home. The topic was the pension funds and the idea of a member of parliament, Mordur Arnason, to give people the choice to use their monthly payments into their own pension fund to pay up their mortgages. So instead of forming rights within the pension system, people would pay down their debts instead.
I pointed out that Arnason's idea was simply based on the fact that the yield pension funds are getting, costs etc. taken into account, is only around 2.5%-3.0% (real interest rates). In the meantime, mortgages in Iceland carry 4-7% real interest rates. So why not pay back your debts first and then build up your rights within the pension system?
Thorhallur Josepsson from The Pension Fund of Commerce was in the studio. He agreed with me that Arnason's idea deserved some serious thinking. But he didn't agree with me entirely, at least not when I said my opinion on the general structure of the Icelandic pension system and when I commented on the funds' need to get 3-4% real rate of return if they were going to be able to stand by the promises they are legally obliged to.
The clip can be found in the link below (Icelandic).