General information about payments to pension funds

All wage earners and those who operate a business or who are an independent operator are obliged to pay into a pension fund from the age of 16 to 70. VR members pay 4% of total wages and the amount must be stated in the pay slip. The employer pays 8.5% against the wage earner’s contribution from 1 July 2016. This amount is not stated on the pay slip.

Increase of matching contribution into pension fund

According to VR collective wage agreements, there will be an increase of employers’ contribution into pension funds. The employers’ matching contribution increases by 3.5% in three stages until 2018. A part of the addition may be allocated to specified personal savings account as of and including 1 July 2017.

From 1 July 2016: 8.5%

From 1 July 2017: 10.0%

From 1 July 2018: 11.5%

See more information here (Icelandic only)


Contribution to personal pension fund

Everyone can also pay into a personal pension fund, up to 4% of total wages. This payment is optional for everyone and is additional to the 4%, which is an obligatory payment. This arrangement is the same in both VR agreements. In the cases where the employee makes an additional contribution to a personal pension fund, 2-4%, the employer matches it with a 2% contribution.

The contribution must be paid to the personal pension division of the pension fund which the wage earner is a member of, unless he decides otherwise.

 

Do you need more information?

More detailed information about pension payments and withdrawal of pensions is on the Pension Fund of Commerce webpage, www.live.is and the Birta Pension Fund webpage, www.birta.is.