My pension fund

You should attend annual general meetings and pay attention to the operations and performance of the fund. These are important rights which require following like other assets. Some pension funds also invite their members to attend seminars on pension matters. Attending such seminars can prove to be very useful to attend such seminars to keep up with pension matters and thus be better prepared to assess whether your rights are adequate.

Your pension fund will send you a statement of contributions twice a year. You should compare this to your pay slips. If any payments are missing, you should contact your wage payer and request an explanation or contact your pension fund and ask the fund to collect the unpaid contributions. Pension rights are based on paid contributions.

Most pension funds also offer their members access to protected websites containing information on contributions and rights. Request access to this information so you can monitor contributions and rights at your convenience.

Most pension funds grant loans to their fund members against a mortgage, subject to specific conditions being met. The credit terms of loans to fund members are, generally, very competitive, making them a good option for those needing long-term loans, e.g., for buying real estate.

Membership in a pension fund depends on which wage agreement and/or special act applies. If your wage agreement does not cover the occupation in question, or if your contract of employment is not based on a wage agreement, you will be able to choose your pension fund, depending on the regulations of the individual funds.

The regulations of some pension funds do not allow everybody to be a member. This, for example, is the case for the Pension Fund for State Employees (LSR).

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Earned rights are preserved for the fund or funds you have paid into. When the time comes for pension payments, you must apply for them.

Yes, by law all wage earners, as well as those who are self-employed, are obligated to ensure their pension rights by being a member of a pension fund. This obligatory membership lasts from age 16 to 70.

Under the Pension Fund Act, foreign nationals being paid wages in Iceland shall pay into a pension fund under the same regulations as Icelandic nationals. An exception to this is when a foreign national within the European Economic Area (EEA) is employed by a foreign company for a limited time and is in possession of an E 101 Certificate issued by his/her home country. Then, he/she enjoys the same insurance as the social security legislation of his/her home country stipulates.

The minimum mandatory contribution to a pension fund is 15,5% of total wages from age 16 to 70.

Wage agreements cover payments into pension funds. The general rule is that the wage earner pays 4% of his/her total wages, and the matching contribution of the wage payer is 11.5%, total contribution of 15.5%. This applies equally to state and municipal civil servants.

The foregoing describes the general rule, but there are exceptions to it, such as for bank employees and employees in older state and municipal pension systems.

Rights are not forfeit even though the statements have been lost. You can contact any of the pension funds to which you have belonged and obtain a password to the fund members’ website where you will find a statement showing all the pension funds you have paid into.

You can also review your overall rights in coinsurance funds at The Pension Portal. Pension fund members have access to the Pension Portal on the websites of the pension funds, using the same password as for the fund members’ website in question. 

 By paying into a pension fund, fund members earn the following rights.

• Old age pension to the end of their lives.
• Disability pension upon the loss of employment due to accidents or illness.
• Pension to the surviving spouse upon the death of the fund member, generally a temporary pension (3 to 5 years), while some pension funds will pay a pension to surviving spouses to the end of their lives.
• Payments for surviving children upon the disability or death of the fund member.

The chief objective of pension funds is to pay old-age pensions through the end of their fund members’ lives.

As the payment of old age pensions generally constitutes the biggest portion of the fund members’ income during their retirement years, pension fund rights are very important.

According to Article 19, Paragraph 4 of Act no. 129/1997, it is permissible to reimburse foreign nationals’ pension fund contributions upon their moving away from Iceland, provided that such reimbursement is not prohibited under international agreements to which Iceland is a party.

Iceland has already concluded international agreements with over thirty countries, referred to hereinafter as contracting states. Contracting states are the United States, European Economic Area (EEA) member countries, and Switzerland; i.e., all EFTA and EU member states.

• EFTA states are Iceland, Norway, Liechtenstein, and Switzerland, by virtue of the Vaduz Convention.
• EU member states are Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Greece, the Netherlands, Ireland, Italy, Croatia, Cyprus (the Greek part), Latvia, Lithuania, Luxembourg, Malta, Portugal, Poland, Romania, Slovakia, Slovenia, Spain, Sweden, the Czech Republic, Hungary, and Germany.

A person who is a citizen of a contracting state may not apply for reimbursement of pension contributions upon moving away from Iceland.

Even if a person has multiple citizenship, it is not permissible to reimburse contributions if the person is a citizen of one or more contracting states. In cases of such multiple nationality, all of the countries concerned must be non-contracting states in order for reimbursement to be permissible.

Special rules apply to British nationals who were citizens of a contracting state until 1 January 2021; i.e., while the UK was still a member of the EU. In the case of British nationals who moved to Iceland and began working in Iceland on or after 1 January 2021, it is permissible to reimburse pension contributions for January 2021 and subsequent periods.

 Regarding Europe - further information 

Pension fund contributions are to be paid monthly. They are due by the 10^th day of the month following the month for which wages have been paid. Note, however, you have till the last day of the month to pay a contribution. After that, penalty interest begins accruing from the due date (the 10^th day month).

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The Directorate of Internal Revenue monitors the payment of pension contributions by comparing information provided by the pension funds to the paid-in contributions with information provided on the tax returns of wage earners and the self-employed.

Pension funds send each fund member a statement of the contributions received on his/her behalf. Delivering such statements in electronic form is permitted if the fund member requests it.

Fund members ought to check that the mandatory contributions are being paid on their wages. For the Wage Guarantee Fund to cover the contributions of a wage earner, he/she must verify the wage payer’s submission of them to the pension fund within 60 days from the date of the statement.

If contributions are missing from the statement, it is important that the wage earner notify the Wage Guarantee Fund of this by submitting their pay slips within 60 days.

Pension rights are exclusively based on paid contributions.