The VR Contingency Fund is a personal fund for VR members, in each member’s name. Members choose how they use their balance in the fund to pay for services or goods, within the limits set by the union and detailed in the fund’s regulations.
Below is a list of what the fund balance can be used to pay for, though this list is not exhaustive:
| Unemployment | Heart health screening | Education, vocational school tuition |
| Children, school supplies | HL Clinic | Massage |
| Children, leisure activities | Chiropractor | VR vacation home, rental |
| General travel expenses | Cancer screening | Couples therapy |
| Travel, flights | Laser surgery | Psychological services |
| Travel, accommodation | Fitness | Physical therapy |
| Parental leave, loss of income | Fitness equipment | Retirement / 60+ |
| Glasses | Medication | Dental care |
| Health courses | Medical expenses | Insurance, life insurance |
| Health institutions | Acupuncture | Insurance, illness |
| Hearing aids | Education, book purchases | Illness / Disability |
Fund contributions
An annual deposit is made to the VR Contingency Fund after the Annual General Meeting held in March. Contributions are income-based, and the annual deposit amounts to approximately 4% of one month’s wages on average based on the previous year. All VR members receive an annual contribution to the Contingency Fund, regardless of how long they have been with VR or what their income is.
Example of a deposit into the VR Contingency Fund in 2025:
An individual earned an average monthly salary of ISK 840,000 in 2024. They received a lump sum of approximately ISK 33,000 into the fund in March 2025. If their salary had varied during 2024, either higher or lower, the fund contribution would take that into account.
Balance Accumulates Year to Year
The VR Contingency Fund is based on accumulation. If no withdrawals are made from the fund for a while, whether the full amount or part of it, the balance remains and the next deposit adds to the existing amount. In this way, members can build up a personal contingency fund. Calculate what would be deposited into your VR Contingency Fund, see more here.
The balance begins to expire (25%) two years after leaving the union and expires in full after five years.
No Annual Limit
To receive a grant, the member must have a balance in the fund. There is no maximum amount for payments from the fund, as long as a balance is available.
In most cases, an application must be submitted and a receipt for incurred costs must be provided. The cost is reimbursed in full, if the balance allows, minus income tax where applicable.
Other Grants / Union Subsidies
If the VR Contingency Fund is chosen in the election, grants from the VR Sick Pay Fund will remain unchanged, as will the availability of Icelandair gift certificates (subject to agreement with partners). If the traditional grant system is chosen, the VR Sick Pay Fund grants and Icelandair gift certificates will be discontinued, but it will still be possible to apply for grants for IVF and vacation purposes.
Grants from the VR Sick Pay Fund are as follows:
- IVF grant: ISK 250,000 for each VR member, paid once.
- Travel cost grant to access specialist medical services: ISK 150,000 per calendar year per VR member.
Icelandair gift certificates are as follows:
- Each VR member may purchase four certificates per year. Each is subsidized by ISK 6,100 and has a value of ISK 30,000.
Taxation of Grants – Important to Keep in Mind
No income tax is paid on grants for vacation accommodation or fitness (including rehabilitation comparable to sports activity) up to a certain limit. Grants for job-related education are exempt from withholding tax, but the cost must be reported as a deductible expense against the grant on the tax return. Other grants are taxed similarly to wages; income tax at rate level 1, or 31.49%, is deducted from the total grant amount and VR remits that amount to the tax authority.
Comparison – VR Contingency Fund vs. Traditional Grant System
| VR Contingency Fund | Traditional Grant System | |
| How do you get reimbursed / a grant | Your personal fund, income-based | Apply for grants, with limits per grant |
| Can you accumulate between years? | Yes | No |
| Number of grant/payment options? | Very flexible, about 40 options | 7 categories with about 12 grant options |
| Maximum amount? | No fixed limit – up to available balance | ISK 120,000 per year total (plus parental grant) |
| Flexibility? | High |
Limited to categories |
| Parental grant | No, but can apply for loss of income during leave | Yes, ISK 100,000 paid once per child |
| Icelandair gift certificates? | Yes | No, but can apply for vacation grant |
| Grant for renting VR vacation homes? | Yes | No |
The total annual cost to the union is estimated to be the same, regardless of which option is selected. In 2024, VR contributed ISK 1.050 million to the VR Contingency Fund. The total amount paid from the fund, plus grants from the VR Sick Pay Fund and the Icelandair gift certificate subsidy, was about ISK 980 million in 2024.