My pension fund

  • Do I really have to attend meetings and seminars of my pension fund? Shouldn’t I make better use of my time?

    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.

  • Must I monitor whether my wage payer pays its contributions to my pension fund?

    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.

  • Is it possible to obtain loans from pensions funds?

    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.

  • Can I choose the pension fund into which I pay?

    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).

    Educational video

  • Can I get a refund of paid-in contributions if I leave the fund?

    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.

    When foreign nationals leave Iceland, they may be entitled to a refund of their contributions, providing they are nationals of countries outside the European Economic Area (EEA).

  • Am I obligated to pay into a pension fund?

    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.

  • Are foreign nationals obliged to pay into pension funds?

    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.

  • How much am I obligated to pay into a pension fund?

    The minimum mandatory contribution to a pension fund is 12% 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.

  • I cannot recall which pension funds I have paid into during my life. Is there any chance that any payments would be lost or forfeit?

    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. 

  • What do I gain by paying into a pension fund?

     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.

  • What happens to the contributions paid by foreign nationals when they return to their home country?

    It is not permitted to refund contributions to foreign nationals within the European Economic Area (EEA). This is according to an agreement between the member states of the EEA on the application of social security regulations those who move between the member countries.

    Refunds of contributions to foreign nationals of countries outside the EEA are authorised when they move from Iceland. Both the contributions of the fund member and the employer will be refunded without interest but with adjustment for indexation. If the fund member has acquired the right to extrapolated calculation of disability (usually after 3 years), the refund ratio may be reduced.

    Further information

  • I am self-employed. When am I supposed to pay into a pension fund?

    Pension fund contributions are to be paid monthly. They are due by the 10th 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 10th day month).

    Educational video

  • Who monitors the payment of contributions into pension funds?

    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.