The VR Contingency Fund combines the member entitlements from various different funds into one fund, which members can utilise with more freedom and greater flexibility than was previously the case. Funds previously used for grants of various kinds from VR sickness fund and the vacation fund, now accrue to the Contingency Fund.
Deposits and withdrawals
Deposits to the Contingency Fund are performed following the annual meeting. The Board of VR submits a proposal to the annual meeting of how high a percentage of employee contributions shall accrue to the Contingency Fund. The percentage relates to the performance of the funds. The Annual General Meeting then decides the final percentage.
Withdrawals can be made as long as there is credit balance. Payments are made on Thursday afternoons and applications shall be submitted no later than the day before.
Deposits to the fund are only made once a year (shortly after the annual meeting) after which individual balances are updated. To withdraw from the fund it is best to log into My Pages and apply for a grant.
Supporting documentation are invoice/payment receipt issued by vendor that includes the name of the VR member and what is being paid for, medical certificate for health issues, confirmation of unemployment etc. Please note that a credit in VR Contingency Fund can only be used for the member in question and not other family members, except for applications regarding leisure activities for children under the age of 18.
Payments from the Contingency Fund are generally subject to withholding tax, and withholding tax is deducted from the amount before disbursement. We still apply RSK authorisation for non-taxable funds, see further information here.
If members leave VR, their entitlements decrease by 25% after 24 months from their last deposit to the fund and then by 25% every year thereafter until their entitlements have expired. Entitlements of less than ISK 1,000 however, expire as a lump sum.
The Contingency Fund is a typical rate fund, where credit is in units that have a certain conversion rate. At purchase, credit is created at the daily rate. The performance of the Fund and the credits of each member, therefore, changes with changes to the rate.
If the rate is 100 on the day of purchase and the purchase amounts to ISK 15,000, the number of credits is 150. If the performance of the fund is 5% and the credit has remained untouched and the rate has increased to 105 a year later the credit amount is:
Unit x rate = 150 x 105 = ISK 15,750