Disability pension

The social security system will also pay a disability pension. See further the website of the Social Insurance Administration, www.tr.is.

The disability pension paid by the social security system may affect the disability pension paid by the pension funds. When calculating whether a fund member has suffered an income reduction due to impaired working capacity, consideration is given to earned income from work, payments by the social security system and pension funds and contractual payments.

No

If you are injured or become seriously ill, and this impairs your working capacity, or causes a loss of income, you may be entitled to a pension.

This decision is decided by a loss of income of at least 50% (40% at some funds) and you have been paying into a pension fund for at least two years.

The first three years consider the fund member’s loss of work capacity, based on the work to which membership in the pension fund is related. After this period, the standard shifts to work capacity for all general jobs even though the member cannot do the job he did before the illness or accident. Therefore, this cancels the right to disability if the fund member can do all general jobs.

A right to a disability pension may require a fund member to engage in rehabilitation. This also pertains to the start of disability and to later reassessment.

A disability pension is paid until the fund member has reached pensionable age. At this point, it will change to an old age pension. However, a disability pension will be cancelled if the fund member regains full working capacity or does not suffer any reduction of income due to his/her impaired working capacity.

The amount of a disability pension depends on the rights a fund member has acquired in the fund. Fund members may be entitled to additional rights, based on payments they would have made if they had paid their contributions up to their pensionable age.

Rights to which a fund member is entitled, in addition to his/her acquired rights, are called extrapolated rights. To have such rights, the fund member must have paid into the pension fund for at least four consecutive years. In addition, during this period he must have made payments for at least six of the 12 months prior to his/her loss of working capacity.

The right to extrapolation depends on the loss of working capacity not being due to the abuse of alcohol, medications or narcotics. If this is the case, the amount of the disability pension shall be limited to the accumulated rights.

Yes. In general, the amount of the child allowance does not depend on the fund member’s wages. Rather, it is a fixed amount which will change in keeping with the rise in the Consumer Price Index (CPI). If a fund member is receiving a disability pension, it will, in addition to any child allowance, never exceed the loss of income which the fund member has verifiably suffered due to his/her disability.

No. Pension funds do not pay a pension due to unemployment.

No, the condition for the payment of a disability pension is that the pension member has suffered a reduction in income due to an accident or a long-term illness. In the calculation of the reduction in income, consideration is given to earned income from work, payments by the social security system and pension funds and contractual payments.